On April 7, the first trading day after the Qingming Festival holiday, China’s A-share market suffered a heavy sell-off, with all three major stock indexes falling sharply in a broad-based decline, resulting in significant losses for most investors.

By the close, the Shanghai Composite Index stood at 3,807.45 points, down 1.87%, breaking below a key support level and hitting a recent low. The Shenzhen Component Index closed at 13,352.90 points, down 1.92%, and the ChiNext Index ended at 2,658.32 points, down 1.65%. Total trading volume in both markets expanded to 1.82 trillion yuan as panic selling intensified. Only 587 stocks rose, while 5,213 declined, creating a nearly 1:9 ratio of gainers to losers.

Sector performance was extremely polarized. High-dividend blue-chip sectors, including banking, utilities, and coal, showed relative resilience. Innovative pharmaceuticals, CXO, and gold and precious metals attracted capital due to their safe-haven properties and became rare bright spots.

Meanwhile, tech growth sectors such as AI computing power, CPO, and semiconductors were among the hardest hit. High-position new energy stocks and micro-cap stocks also faced heavy sell-offs as capital fled collectively. Northbound capital posted a net outflow of 4.56 billion yuan, and major institutional funds also withdrew significantly, with risk aversion dominating market sentiment.

Analysts attributed the sell-off to three main factors. First, escalating geopolitical conflicts in the Middle East during the holiday triggered sharp volatility in international oil and gold prices, increasing external uncertainty and boosting risk aversion. Second, as the first-quarter earnings disclosure window approaches, the market holds concerns over the performance of some high-valued stocks, coupled with profit-taking from early gains.

Third, the People’s Bank of China rolled over 800 billion yuan of buyback repos at a reduced volume, and new short-term trading regulations from the CSRC took effect, leading to cautious policy interpretation. In the short term, the market will remain in a volatile adjustment phase, with capital likely to continue favoring high-dividend and low-valuation defensive sectors.