China’s stocks fell the most in a month as industrial company profits declined and concern grew a new system for initial public offerings will damp demand for existing equities.
The Shanghai Composite Index slumped 2.6 per cent to 3,533.78 at the close, paring a quarterly advance to 16 per cent.
A gauge of dollar-denominated mainland stocks dropped for the first time in 14 days.
Industrial profits declined for a sixth month in November.
Chinese lawmakers cleared the way for rules to be changed as early as March to allow a registration system for IPOs.
China Telecom slid in Hong Kong after its chairman became the latest high-ranking executive to be targeted by anti-graft investigators.
“Investors don’t like declining industrial profits and they don’t like ongoing corruption investigations in China,” said Andrew Clarke, director of trading at Mirabaud Asia in Hong Kong.
“There are plenty of reasons to lighten their load ahead of the new year and there’s no reason to open any new positions. That’s going to exaggerate the down swing in the market.”
The Shanghai Composite is the best-performing major global index this quarter as government intervention to halt a $5 trillion equity rout helped stabilize the stock market.
While shares have rebounded, slumping industrial profits are the latest sign authorities are struggling to reduce overcapacity and halt declines in producer prices.
Under the new registration system, IPO supply and timing would be decided by companies and the market, rather than regulators.
The CSI 300 fell 2.9 per cent, led by industrial and financial companies.
Hong Kong’s Hang Seng China Enterprises Index slid 1.7 per cent, while the Hang Seng Index declined 1 per cent.
Financial and industrial companies led declines in mainland trading. Citic Securities and Huatai Securities sliding by at least 5.8 per cent.
Bank of Beijing plunged 4.8 per cent, while China Life Insurance slid 3.7 per cent.
China Shipping Container Lines and China Cosco Holdings both slumped by the 10 per cent daily limit.