Chinese stocks closed lower on Tuesday, with the Shanghai Composite falling 0.4% to 3,951 and the Shenzhen Component losing 0.5% to 14,249, as investors turned more cautious over geopolitical risk and a fresh pullback in AI-related shares. Sentiment weakened after hopes for a near-term easing in US-Iran tensions faded, with the renewed diplomatic standoff clouding prospects for a swift reopening of the Strait of Hormuz (a key global shipping chokepoint) and keeping pressure on broader risk appetite. At the same time, renewed selling in the AI trade (a market bet on artificial intelligence-linked shares) added to the retreat as investors rotated into defensive sectors. Among the biggest decliners were Zhongji Innolight, Eoptolink Technology, Cambricon Technologies, Hygon Information Technology and SMIC.