SHANGHAI shares dipped yesterday, led by poor performance of blue chips despite active trading in small caps, and analysts said the market will not fall drastically even as it corrects so long as trading is active.
The benchmark Shanghai Composite Index slipped 0.98 percent, or 54.11 points, to close at 5,443.79. Gainers outnumbered losers 471 to 311 while 68 stocks were unchanged. Turnover rose to 151.53 billion yuan (US$20.9 billion) from 142.25 billion yuan a day earlier.
Heavy-weighted shares like financial and property firms led the decline.
Industrial & Commercial Bank of China, the country's biggest lender, lost 2.05 percent to 8.12 yuan while China Merchants Bank shed 3.08 percent to 41.81 yuan.
China Life Insurance Co shed 2.88 percent to 57.27 yuan while Ping An Insurance (Group) Co lost 4.02 percent to 105.04 yuan. China Pacific Insurance fell 1.77 percent to 47.75 yuan.
"Insurers shed on concerns of high valuation after days of growth," said Pan Hongwen from Haitong Securities Co. "The tight monetary policy still adds pressure on the financial sector."
The People's Bank of China said it will shift from a prudent to a tight monetary policy this year. It was also reported on Monday that credit growth this year will not be higher than the level in 2007.
Poly Real Estate Group Co slumped 6.21 percent to 75.03 yuan.
Meanwhile, some small-caps were actively traded yesterday, including the medical and agricultural sectors.
"As long as the active trading of small caps can continue, the market can still manage an upward trend amid correction of the key index," said GF Fuhua Securities Co in a note.
Shandong Lukang Pharmaceutical Co soared to 8.09 yuan by hitting the 10 percent daily trading cap.
Tibet Rhodiola Pharmaceutical Holding Co rose 9.99 percent to 16.85 yuan.