Shanghai: China blue-chip stocks fell for a second day on Wednesday on lingering fears of further regulatory tightening, even though most China watchers do not expect any major new clampdown ahead of a sensitive national leadership reshuffle in autumn.
The blue-chip CSI300 index fell 0.4 per cent to 3,705.39 points, while the Shanghai Composite Index added 0.1 per cent to 3,247.67 points.
Traders said investors grew wary after the country's central bank pledged to strictly regulate financial market trading, and as the securities regulator vowed to maintain "normalisation" of new listings.
The central bank said on Tuesday that it would strengthen the regulation of internet finance as policymakers looks to control risks in what regulators have called "chaotic" financial markets.
While such statements about tackling risks are hardly new, they underscored the nervous market mood after top leaders recently reiterated they would press ahead with efforts to reduce risks in the financial system. Authorities had launched a series of measures earlier this year.
The market seemed largely unaffected by news that China will turn all big companies owned by the central government into limited liability firms or joint-stock firms by the end of 2017, which could potentially encourage more merger activity in the bloated and often inefficient sector.
"The reform plan will have limited impact for now, as those centrally owned firms are confronted with other problems including overcapacity, which could not be simply resolved by changing mechanisms," said Yang Weixiao, analyst with Founder Securities.
The start-up board index ChiNext slid 0.4 per cent after the securities regulator said it would maintain "normalisation" of initial public offerings and improve the mechanism for delisting shares from stock markets, without giving details.
China approved roughly 250 IPOs in the first half, mostly by small- and mid-cap companies, which investors say has contributed to a steady fall in share prices of small companies.
Sector performance was mixed, with losses led by consumer and healthcare stocks, which have ranked among best performing sectors since 2017 as investors sought shelter in defensive blue-chips.