Shanghai: China's main indexes fell for their fourth straight session on Wednesday, as investor worries deepened that tighter regulations against speculation and shadow banking will hurt the country's credit-fuelled recovery.
The blue-chip CSI300 index fell 0.5 per cent to 3,445.88 points, while the Shanghai Composite Index lost 0.8 per cent to 3,170.69 points.
Small-caps stocks, in particular start-ups, fared poorly with the ChiNext index closing at a three-month low.
Analysts attributed the recent market weakness to worries that China's stimulus-driven recovery since late last year is fading amid the government's renewed campaign against excessive leverage and asset bubbles.
"Tough regulations have soured the market mood," said Wu Kan, Shanghai-based head of equity trading at Shanshan Finance.
China has stepped up property curbs in major cities, launched a nationwide inspection on banks' businesses with a focus on shadow banking, and vowed to fight speculation in the stock market.
Underscoring the painful trade-off China is facing, the International Monetary Fund on Tuesday warned of potential economic disruptions in the medium-term if it failed to reduce its reliance on rapid credit growth.
Some investors worry that strong economic growth reported in the first quarter will begin to ease in coming months as the effect of earlier stimulus starts to fade, and as local governments announce tougher measures to curb the overheated property market.
The central bank has also signalled a move to a tighter monetary policy bias, raising short-term interest rates to contain risks in the system and discourage speculation.
Shares fell across the board, with raw material shares among the worst hit as commodity prices fell sharply.
But consumer and healthcare stocks — generally viewed as defensive in nature — continued to outperform the broader market, which fund manager Wu attributed to the need for "investors to gather together for warmth" amid a time of volatility.