The mainland's A-share market suffered a delayed reaction to Monday's rout in Hong Kong, sliding sharply in Shanghai and Shenzhen yesterday.
Analysts said the unexpected sharp fall was triggered by rumours of widespread selling by Hong Kong investors and was stemmed in afternoon trading after a rebound at Exchange Square and talk that Beijing would make encouraging noises to support the markets.
The news resuscitated B shares, which rose for the first time this year, as mainland investors moved in to bargain hunt in afternoon trade, erasing entirely the morning losses.
In Shanghai, the A-Share Index shed 4.98 per cent, or 64.852 points, to 1,236.165 points, after having lost as much as 10 per cent at one stage.
In Shenzhen, the A-Share Index lost 5.6 per cent, or 23.67 points, to 399.13 points after slumping to an intraday low of 380.88.
'We did not expect such heavy selling of A shares and it seemed to come from Hong Kong investors, who were selling off strong stocks for cash,' Haitong Securities analyst Zhu Zhang said.
A shares are meant for domestic investors, but foreign investors have reportedly exploited loopholes and weak enforcement to invest in them.
