The mainland stock market plunged 6.54 percent to close at a 16-month low yesterday, erasing 1.27 trillion ($184 billion) of total market capitalization.
The benchmark Shanghai Composite Index fell 192.25 points to close at 2748.87, and 852 of the 912 stocks closed lower. The Shenzhen Component Index sunk 7.49 percent, or 741.57 points, to close at 9161.56.
The turnover on the two bourses was 89.98 billion yuan, down 11.9 percent from Wednesday, and the total capitalization dropped 6.6 percent to 17.8 trillion yuan.
Concern over a decline in corporate earnings because of the weak greenback and the slowing of demand in the US forced Asian stocks to drop sharply.
In Hong Kong, the Hang Seng Index fell 2.26 percent to 22797.61, and in Japan, the Nikkei 225 Index dropped 2.23 percent to 14130.17.
On the mainland, PetroChina tumbled 5.72 percent, after its pre-tax profits were reported to have slid nearly 40 percent year-on-year in the first five months. The other listed oil refiner, Sinopec, shed 3.38 percent to close at 12.57 yuan.
Airlines' stocks fell because surging fuel prices and the cooling down of the aviation industry have caused their earnings to drop. Air China plunged 9.98 percent, and China Eastern plummeted the daily allowable limit of 10 percent.
Analysts say some fund managers have begun dumping part of the holdings because of rising redemption from individual investors.
A gloomy global economic outlook and the Chinese government's vow to tighten monetary measures, too, have dampened investor sentiment.
"Wednesday's 5.24 percent jump triggered profit-taking from mutual fund investors, which pushed some large fund management companies to sell stocks," Changjiang Securities analyst Zhang Fan said.
Mutual funds have suffered heavily because of the poor performance of the stock market. The net value of an equity fund, managed by the joint venture UBS SDIC, fell under 0.5 yuan each on Wednesday against its issue price of 1 yuan.
Most mutual funds issued this year have not been able to raise their planned capital amount because of lack of investor enthusiasm.
JPMorgan China Equities chairman Jing Ulrich said continued concern over inflation has weighed on investor sentiment too, because domestic price interventions have resulted in lower profits for certain sectors such as refineries and power plants.
Source:China Daily
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