China's main stock index fell 5.25 per cent today as new listings add to share supplies and a special bond issue threatens to pull liquidity from the market.
The market has fallen more than 15 per cent in a little over two weeks, and analysts said it faced a medium-term correction after an overheated rally that had quadrupled the value of the index since the start of last year.
The Shanghai Composite Index finished at 3,615.872 points, its lowest close since April 20th. It has steadily pulled back from a recent high of 4,311.997 points on June 20th.
Large-cap blue chips such as Bank of Communications (BoCom) led the fall after outperforming the market and lending support to the index during recent pullbacks, indicating investor sentiment was worsening.
BoCom was today's biggest index mover, closing down 5.69 per cent at 10.45 yuan. Top insurer China Life, the second-biggest index mover, slid 3.77 per cent to 39.28 yuan.
Their losses helped to make financials the worst-performing sector, accounting for nearly half of the index's decline.
Losing Shanghai stocks overwhelmed gainers by 826 to 48. Turnover in Shanghai A shares was light at 73 billion yuan ($9.6 billion), little changed from yesterday and less than one-third the daily record on May 30th, suggesting many investors were shunning the market.