(Bloomberg) -- China’s stock rally cooled Tuesday, after record turnover and surging margin loans suggested the market may be getting overheated.

The CSI 300 Index closed down 0.6%, while benchmarks in Hong Kong pared gains in the afternoon session. Turnover on the Shanghai and Shenzhen stock exchanges rose to yet another record of 3.65 trillion yuan ($523 billion), topping Monday’s tally. That’s after the value of margin trades climbed by 1.8%, the most in three months, to 2.65 trillion yuan.

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Stocks had a stellar start to the year, as investors were drawn to China’s tech renaissance. Advances in artificial-intelligence technology and Beijing’s policy support fueled gains in chip stocks and other hardware makers, with the tech-focused Star 50 Index gaining more than 9% so far in January. A wave of initial public offerings by local chipmakers and AI firms have added to the optimism.

Worrying signs have started to emerge. The 14-day relative strength index, a momentum indicator, for the Shanghai Composite Index rose to 81 on Monday, making it the most overbought since August. Warnings of irrational hype around rocket stocks, which had posted sharp gains, also damped sentiment.

“Multiple measures to cool the market are taking effect,” including the risk warnings by listed companies, said Fu Zhifeng, chief investment officer at Shanghai Chengzhou Investment Management Co.

A group of exchange-traded funds that track the CSI A500 Index, whose members include the nation’s largest and most liquid companies, are now seeing outflows after seeing record inflows.

Still, state media and the authorities — who typically urge restraint when markets overheat — have yet to deliver any explicit indication that the market is getting ahead of itself. Improving fundamentals may ensure the rally has staying power. Stocks in the MSCI China Index are forecast to see earnings growth of 14% this year, outpacing similar gauges for India and Japan.

Even with Tuesday’s retreat, the CSI 300 is up 2.8% for the year, outperforming global stocks. The Hang Seng Tech Index has gained more than 6%.

“Fundamentals, sentiment, breadth and the calendar effect right now all point to a window where downside is limited while upside potential remains,” said Zhang Qiyao, an analyst at Industrial Securities. “February usually marks a period of good returns and any short-term fluctuations could present opportunities for buying on dips.”

--With assistance from Lin Zhu.

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