China stocks plunge further on property concern

Chinese shares continued to plunge on Tuesday following a two-percent decline the previous trading day as concerns linger over the country's real estate market. The benchmark Shanghai Composite Index dropped 2.05 percent, or 42.47 points, to finish at 2,034.22, while the Shenzhen Component Index shed 3.16 percent, or 238.59 points, to close at 7,303.95. Combined turnover on the two bourses expanded markedly to 333.39 million yuan (54.49 billion U.S. dollars) from 256.6 million yuan the previous trading day. On Tuesday, nearly 90 percent of A-share companies shed hard, led by property developers and banks. This slump was triggered by the grim outlook of major property developers toward the market this year, and by worries that commercial banks will tighten lending to the sector after the Industrial Bank halted its loans to some property projects to ward off a liquidity crunch. Data released on Monday by the National Bureau of Statistics suggested a divergence might occur in the home markets of big cities and smaller ones. While prices may continue to rise in the former, they are are expected to cool gradually in the latter. Those factors led to fears about the property bubble bursting and pessimism about the economic outlook, which in turn caused a money retreat that affected the entire board on Monday and Tuesday. China Vanke, the nation's largest listed property developer, dropped 1.79 percent to finish at 6.57 yuan per share, while the sector's largest decline fell to Guangdong Highsun Group, which plunged 8.67 percent to end at 9.8 yuan per share. In addition, the central bank on Tuesday announced the launch of 14-day forward repurchase agreements, for the third time in two weeks and the largest of this year, in a bid to further withdraw liquidity from the money market. China Citic Bank dropped 4.45 percent to close at 4.94 yuan per share, while China Everbright Bank declined 2.02 percent to finish at 2.43 yuan per share. Bucking the trend, Chinese oil giant Sinopec climbed 1.45 percent to close at 4.89 yuan per share, as it announced a bid to attract social and private capital, seen as part of the country's endeavors to build a mixed ownership economy The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, declined 4.37 percent, or 67.34 points, to end at 1,472.69 points on Tuesday