China shares hit a new 21-month low as investors dump bank, realty stocks

Mumbai: Chinese stocks hit a new 21-month low on Thursday, falling by as much as 3.34 per cent, as investors dumped financial and real estate stocks on concerns over worsening asset quality amidst increasing fears of an economic slowdown, dealers said.

The weak performance of regional markets and lack of policy support from the government further dampened investor sentiment.

The benchmark Shanghai Composite Index was down 71.78 points at 2,078.98 - the lowest level since 29 November 2006. The key index sank as turnover stood at 27.2 billion yuan ($4.0 billion).

The Shanghai A-share index lost 75.29 points, or 3.34 per cent, at 2,182.11 points on turnover of 27.1 billion yuan, while the Shenzhen A-share index fell 13.15 points, or 2.13 per cent, to 602.78 on turnover of 10.9 billion yuan. 

There were more sellers than buyers with heavy across-the-board sales, especially in large-cap banks, insurance companies and real estate firms.

Among the worst sufferers, Shanghai Pudong Development Bank, fell 7.7 per cent to 15.93 yuan, insurance company Ping lost 6.6 per cent at 39.40 yuan and China Life Insurance sank 8 per cent to 22 yuan.

Chinese markets have been languishing amid worries that the economy and corporate earnings growth are both falling. There was little cheer from the government policy side also, inhibiting buying enthusiasm.

Government data showed a sharp drop in inflation last month - suggesting authorities may loosen curbs on bank lending and other spending - was overshadowed by a slowdown in export growth as well. Inflation, however, cooled to a 14-month low of 4.9 per cent in August