Chinese shares fell 1.79 percent on Thursday as investors dumped large caps such as Baoshan Iron and Steel Co Ltd to lock in profits. The benchmark Shanghai composite index stood at 1,088.301 points, extending a 1.35 percent fall in the morning.
The market, lifted by the yuan revaluation in July, has fallen more than 14 percent this year, bogged down by Beijing's efforts to sell down over $250 billion of state holdings in listed firms.
"Investors are worried about the flood of shares to hit the market," said an analyst with Founder Securities. "They won't hesitate to cash in whenever they get the chance." Baosteel, China's top steel maker, was the most actively traded stock of the day. It shed 1.79 percent to 3.84 yuan. China United Telecommunications Corp Ltd, the smaller of the country's two mobile carriers, fell 1.16 percent to 2.56 yuan. Bucking the trend, drug maker Shanghai Pharmaceutical Co Ltd rose 1.82 percent to close at 4.47 yuan, extending recent gains. The stock has climbed steadily this week since media reported that its parent, Shanghai Pharmaceutical (Group) Co, had gained approval to make anti-viral medicine for the Chinese Ministry of Health.