China stocks fell on Tuesday as investors worried that a recovery in the property sector is losing steam, adding to uncertainty over the economic outlook. Traders were also keeping a nervous watch on the weakening yuan, which broke through a psychologically important support level late on Monday. The CSI300 index of the largest listed companies in Shanghai and Shenzhen ended 0.4 percent lower at 3,248.23 points, while the Shanghai Composite Index lost 0.2 percent to 3,036.60.
The SSEC property sub-index fell 0.7 percent. While China posted slightly stronger-than-expected economic growth for the second quarter on Friday, gains were largely dependant on stronger construction activity fuelled by the housing boom and a government infrastructure building spree. The yuan slipped below the 6.7 to the dollar for the first time in more than five years on Monday but recovered some of its losses on Tuesday. Still, most market watchers see it weakening further later in the year.
The Shanghai Composite fell below the key level of 3,000 in early January and has struggled to sustain a recovery above it for most of the year, with a previous breakout stalling in April. Volumes were relatively tepid, with A share volume in Shanghai at 15.49 billion shares, below an average of around 17 billion over the previous three sessions. In Shenzhen, volumes were 19.99 billion shares.