BLUE chips led shares to tumble 5.5 percent in Shanghai yesterday, posting the third biggest daily loss this year.
The benchmark Shanghai Composite Index plummeted 198.63 points to end at 3,413.91. Turnover shrank to 81.2 billion yuan (US$11.6 billion) yesterday from 92.7 billion yuan a day earlier. Decliners outnumbered advancers 754 to 43 while 54 stocks closed unchanged.
Major blue chip losers included banks and petrochemical companies. China Life Insurance, the country's biggest insurer, plunged 7.34 percent to 30.16 yuan. China Merchants Bank lost 5.8 percent to 31.50 yuan. PetroChina Co, the nation's biggest oil company, lost 4.84 percent to close at 17.34 yuan.
"The market is going through a period of profit-taking after four straight trading days of increase," said Wan Bin, a GF Securities Co analyst. "However, even though blue chips fell they still enjoy investment value'' and will rebound.
Qian Qimin, an analyst at Shenyin & Wanguo Securities Co, said "investors should be cautious as more fluctuations are yet to come."
Qian said he was not surprised to see the market dive yesterday. Though it posted a big increase in turnover on Tuesday, the index only edged up at the close, indicating that the slight rebound lacked strength.
Analysts said the market sentiment was still weak because there were no big fundamental changes or government measures that could propel the market in the foreseeable future.
They said some funds may have been diverted to IPOs such as to Jinduicheng Molybdenum while subscriptions to Zijin Mining Group will be open next Tuesday and Wednesday.