China's main stock index climbed 0.83 percent to a record closing high for the sixth straight day on Monday, but it came well off its intra-day high and most stocks fell on profit-taking. The Shanghai Composite Index ended at 5,150.118 points, off an intra-day high of 5,192.061. But losing Shanghai stocks outnumbered gainers by 513 to 330.
Turnover in Shanghai A shares climbed to a three-week high of 175.1 billion yuan ($23.2 billion) from Friday's 164.2 billion yuan because of funds' aggressive buying of banking and steel blue chips in particular.
"The market has become fund-dominated, in contrast to before when individual investors dominated. The funds prefer blue chips, so they are pushing the index up faster" even though many second-tier stocks have become sluggish, said Chen Huiqin, analyst at Huatai Securities.
The index has gained 93 percent so far this year, and after last week's break above 5,000 points for the first time, some traders think 5,500 or 5,600 will be hit this year.
But the index tumbled from near its intra-day high into negative territory at one stage on Monday. Analysts said the dip, and higher turnover, showed a growing number of people expected the market to stall or pull back, at least for the short term.
"There's increasing controversy over stock valuations as some blue chips such as ICBC are rising too fast," said Lu Jiehua at Shenyin Wanguo Securities Co Industrial & Commercial Bank of China, the biggest stock by capitalisation, jumped as high as 7.15 yuan on Monday but ended up only 1.0 percent at 7.06 yuan.
Last week's interest rate hike and the finance ministry's big issues of special bonds to the central bank - some of which may be sold on to the bond market as soon as next month - are making some investors more concerned about stock market liquidity as big IPOs approach in coming months, he said.
ICBC's H shares far outperformed its A shares on Monday, climbing 3.46 percent to HK$5.07. The average premium of A shares over H shares, which has been sliding almost continuously since last Monday, dropped to 61 percent from 68 percent at Friday's close and a record intra-day peak of 84 percent on August 17.
Guotai Junan and Shenyin Wanguo Securities, two of China's top ten brokerages, have applied to Beijing for licences to help Chinese individuals invest in Hong Kong stocks and are expected to win approval soon, sources familiar with the situation told Reuters.
Daily openings of new securities investment accounts jumped to 475,582 on Friday from 386,287 on Thursday, and have been running at very strong levels above 300,000 in recent weeks, China Securities Depository and Clearing Corp data shows. Among leading bank shares on Monday, CITIC Bank shot up 8.64 percent to 12.57 yuan on talk that it had lagged the sector.
Northeast Securities soared to close at 51.70 yuan from 9.08 yuan, but came off an intra-day high of 59.77 yuan, as it resumed trade after being suspended since January 24. It has just completed state share reform. Sinotex Investment & Development rose its 10 percent daily limit to 6.80 yuan after saying it would place up to 37 million new shares to fund a new project in Beijing. It reported a modest first-half net profit rise of 7 percent.
Shanghai International Port closed up 1.09 percent at 10.21 yuan, off an intra-day high of 11.11 yuan, after posting a net profit of 1.83 billion yuan in the first half of this year and saying it planned to issue up to 3 billion yuan of convertible bonds to fund port projects.