China Indexes Extend 3-Day Losses Amid Rising Risk of Regulatory Interventions

Li Chen
04 Sep, 2025
Hong Kong

China's stock market indexes turned lower for the third consecutive day amid worry that regulators may step in to stem the recent rapid rise over the last four months. 

The Hang Seng index declined 1.2%, and the mainland-focused CSI 300 index dropped 2.5% amid growing speculation of market intervention by Chinese regulators. 

Chinese stocks dropped about 10% in early April after the U.S. sharply escalated tariffs on all imported goods and targeted Chinese goods with the highest rates.

The Trump administration paused some of the threatened high tariffs on Chinese goods and entered into negotiations after China retaliated with its tariffs on the U.S. goods and restricted the sale of rare-earth minerals.

Market sentiment was further bolstered after domestic economic metrics showed little negative impact of the U.S. tariffs on China's exports, and first-half economic growth met target rates set by policymakers. 

Over the last eighteen weeks, stock market indexes in China and Hong Kong rallied about 30% and pushed benchmark indexes to multi-year highs, as retail investors rotated out of fixed-income investments into riskier assets.

Weak retail sales and industrial production growth and persistent weakness in the residential market in July raised worries that a bubble may be forming in the stock market. 

Since last week, the run-up in the market has faced headwinds amid worries about the stretched valuations, anemic earnings growth for mainland-focused Chinese companies, and rising risk of a regulatory intervention to curb excessive speculation.

 

China Indexes and Stocks 

The Hang Seng Index decreased 1.2% to 25,032.23, and the CSI 300 index dropped 2.5% to 4,349.83. 

Semiconductor Manufacturing International declined 6.2% to HK $56.15, Xiaomi Corp. decreased 2.2% to HK $53.50, and BYD Electronic International increased 1% to HK $41.50. 

Nongfu Spring Co. inched up 0.4% to HK $49.60, Mixue Group decreased 0.4% to HK $400.0, and Haidilao International decreased 1.2% to HK $13.36.