Chinese shares tumbled 2.97 percent on Monday, hit by a slew of new listings, including one by Poly Real Estate Group Co Ltd, and disappointing first-half earnings by some companies.
Poly Real Estate, the first property firm to list in China for more than a year, bucked the market's downtrend to end at 20.21 yuan, up 44.87 percent from its initial public offering price of 13.95 yuan, as it listed on the Shanghai stock exchange on Monday.
Brokers said Poly's strong debut showed investor interest in new shares outweighed worries about official efforts to cool the property market. Over the past year Beijing has moved to crack down on the red-hot sector, including tax changes and administrative curbs on investment by foreigners. China Vanke Co Ltd, the top listed property stock on the mainlands' bourses, closed down 4.5 percent at 5.54 yuan.
The benchmark Shanghai composite index extended a 2.57-percent loss in the morning to close at 1,612.733 points. Turnover in Shanghai A-shares was a thin 19.4 billion yuan ($2.4 billion), although that was up from 18.9 billion on Friday.
Worries over too many IPOs had kept trading sluggish in July, and dealers said Monday's thin volume could further hurt sentiment in early August.
Daqin Railway Co Ltd, which launched the second-largest domestic IPO this year in July, said on Monday it would list on the Shanghai Stock Exchange on Tuesday.
New shares have all surged on their listings since Beijing lifted a year-long ban on IPOs in May, and that has helped create a fever for IPO subscription, especially on the retail market.
But many traders said the performance of the listings was not supported by those companies' fundamentals, and was partly caused by funds diverting from existing shares.
In addition, the index was under heavy pressure of a decent correction after it had hit this year's high on July 5. Analyst Xu Yinghui at Guotai Junan Securities said the index was set to test the key level of 1,600 soon. Dazhong Transportation Co Ltd, a taxi and freight truck operator, closed down 6.41 percent at 7.3 yuan after the company posted a disappointing 2 percent rise in its first-half net profit, attributing the weak results to surging fuel prices.
State media said on Monday the parents of China's sixth and seventh-largest steel mills were in talks on a likely merger deal, and if successful, it would create the second-biggest steel producer in the country.
However, the buyer in the deal, Jinan Iron and steel Co Ltd, declined 0.77 percent to 3.87 yuan, while the seller Laiwu Steel Corp was down 2.64 percent at 5.54 yuan.
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