China’s stocks took a dip on Wednesday, failing to maintain the momentum of Tuesday’s strong rally. Investor caution loomed as they awaited more stimulus measures from the Chinese government. The CSI300 Index decreased by 0.4%, while the Shanghai Composite Index fell 0.3%. In contrast, Hong Kong’s Hang Seng Index rose by 0.2%.

Frederic Neumann, chief Asia economist at HSBC, noted that ample liquidity coupled with low credit demand suggests that interest rates are likely to stay low, potentially favoring less risky investments. Despite market volatility, improvements in the growth outlook with additional stimulus could provide support for equities in the long run.

Diverging sector performances were noted, with onshore stocks seeing a significant increase on Tuesday due to regulatory support. Semiconductor Manufacturing International Corp’s shares rose nearly 7% on news of further U.S. restrictions on AI technology exports, while social media-themed stocks also posted gains.

(With inputs from agencies.)