Chinese shares slump 5% on closing

Chinese shares slumped 5.00 per cent on Wednesday as investors collected profits across the market after recent gains, with property developers leading the fall, dealers said.

The Shanghai Composite Index, which covers A and B shares, was down 171.94 points at 3,266.43 on turnover of 296.9 billion yuan (US$43.5 billion).

The sharp fall on Wednesday marked the biggest single-day percentage decline since November 18, when the index ended down 6.3 per cent. But the market has surged by about 80 per cent since the start of the year.

"The market does need to correct after five consecutive sessions of gains, and it will likely continue to fall in coming days," Wu Dazhong, an analyst at Shenyin Wanguo Securities, told Dow Jones Newswires.

Meanwhile, concerns about slowing credit growth also weighed on sentiment, traders said.

China's two biggest lenders - Industrial and Commercial Bank of China and China Construction Bank - said they would sharply cut credit growth in the second half, Caijing Magazine reported Tuesday.

The broad-based decline in the market also came after a slew of profit warnings from China's blue-chip companies.

China Cosco plunged 8.4 per cent to 17.54 yuan after saying it would post a net loss for the first half because of declining global trade.

Jiangxi Copper tumbled 9.0 per cent to 42.62 yuan after it said first-half net profit will likely drop 57 per cent to 64 per cent from a year earlier.

Metal companies were also among the day's big decliners due to weak global commodity prices. Yunnan Copper closed down 7.5 per cent at 32.02 yuan and Chalco ended 8.4 per cent lower at 17.31 yuan.

Debut stock China State Construction Engineering jumped 56.22 per cent from its initial public offering price to close at 6.53 yuan, after raising US$7.3 billion last week in the world's largest IPO for 16 months.

The Shanghai A-share index lost 180.69 points, or 5.01 per cent, to close at 3,428.93 on turnover of 295.8 billion yuan. The Shenzhen A-share index fell 70.11 points, or 5.86 per cent, to 1,126.56 on turnover of 131.3 billion yuan.

The Shanghai B-share index fell 8.14 points, or 3.73 per cent, to 210.09, while the Shenzhen B-share index lost 24.14 points, or 4.35 per cent, to close at 531.07.

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