The mainland stock market fell for a third consecutive day yesterday as investors felt queasy about stock valuations amid mounting concern over inflation.
The index is near the level it sank to last month before Beijing intervened, cutting the stamp duty to bolster the troubled market. Analysts and investors speculated that the regulator might step in again, although there might not be any effective new measures it could take.
The Shanghai Composite Index fell 108.547 points or 3.13 per cent to 3,364.544, only 86.21 points higher than the close on April 23 when Beijing announced a substantial reduction in the stamp duty.
'The downward trend is irreversible, and the index will soon test the 3,000-point floor set by the government,' said Citic Securities analyst Sun Chao. 'It is a crucial moment for state leaders because they will lose face if the market keeps crashing.'
Beijing took a drastic step to bolster the market last month when the benchmark index dropped close to the 3,000-point level. The central government orchestrated a 9.29 per cent single-day rally on April 24 as it slashed the tax on stock trading by two-thirds. However, savvy market watchers warned that the market would reverse because fundamental problems had not been solved.
The 8-magnitude earthquake in Sichuan on May 12 spooked regulators, who told fund managers to hold on to shares. However, the market has tumbled 7.3 per cent since the quake hit.
