China's shares closed down 1.25 percent on Tuesday as investors sold companies that have joined Beijing's unpopular scheme to float $250 billion of non-traded state shares in listed firms, such as Shandong Dinghy Seeds.
The benchmark Shanghai composite index finished at 1,096.986 points. It has dived 13.4 percent so far this year, hit by factors ranging from the state share sell-down to Beijing's steps to cool the racing economy.
But analysts said the index also had little room to slide further after a four-year slump and would hover near 1,100 points in the near term. "Trade has been very sluggish recently, indicating investors neither want to push down share prices sharply nor to push it up sharply," said analyst Chen Huiqin at Huatai Securities.
On Tuesday, investors dumped so-called "G" stocks, or firms, which have completed procedures for the state share reform. One such firm, agricultural issue Shandong Dinghy Seeds Co Ltd, was the biggest loser, diving 30 percent to 18.15 yuan.
Other "G" firms were among the top 10 declines. Industrial valve maker Zhejiang Sanhua Co Ltd fell 22.11 percent to 8.28 yuan, Mudanjiang Hengfeng Paper Co fell 22.02 percent to 5.17 yuan and Shanghai Xinmei Real Estate Co Ltd fell 21.8 percent to 3.45 yuan.
"Investors are waiting more and more for state shares to hit markets in coming years," said analyst Liu Benching at Tingeing Securities.
"That's making China stocks unattractive and is keeping the index at multi-year lows."
China in April revived a programme to convert non-traded state shares, which account for two-thirds of market capitalisation, into freely floated stock.
So far, some 300 companies, or more than a fifth of the 1,400-plus listed firms, have said they would join the plan, including 22 that announced their participation on Monday.