Stock markets in Shanghai and Shenzhen plunged sharply Monday mainly due to drops in the heavily weighted real estate sector amid speculations that the central government may have a new batch of cooling measures in store for the country's property market.
The Shanghai Composite Index declined 45.35 points, or 2.14 percent, to close at 2,078.50; while the Shenzhen Component Index slumped 2.93 percent, or 256.36 points, to finish at 8,483.69.
Both indices opened lower Monday and drifted south throughout most of morning trading on contractions in machinery and transportation equipment stocks.
Gold and non-ferrous metal shares outperformed in early trading, although these gains were countered by huge drops in the real estate, cement and finance sectors near the end of the morning session.
Stocks exposed to the domestic real estate market continued their retreat into the afternoon, with the heavily weighted securities sector in close pursuit, dragging mainland markets deep into negative territory by the end of trading.
Property stocks were hit broadly by local media reports that the government of Nanjing would restrict excessive price raising moves by developers in the city in order to keep a lid on real estate costs in the coming months. This action reignited worries among investors that planners in Beijing might be readying more forceful measures to drive down home prices, say analysts.
Poly Real Estate Group gave up 6.72 percent to 9.71 yuan ($1.53). China Merchants Property Development Co slumped 7.84 percent to 19.15 yuan. China Vanke Co declined 3.36 percent to 8.06 yuan.
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