Mainland stocks continued their downward trend yesterday after a three-day trading break as skittish investors were battered by the deepening European debt crisis. But analysts predict the market will soon bottom out amid expectations that Chinese inflation will ease thanks to Beijing's policy tightening. The benchmark Shanghai Composite Index dropped 26.45 points, or 1.06 per cent, to 2,471.3, the third session in a row in which it has closed lower. The market was closed between Saturday and Monday for the Mid-Autumn Festival. Yesterday's close was just above a 14-month low of 2,470.5 that the market reached on September 6. 'The global market wobbles had a negative impact on the locally listed shares,' said Shenyin Wanguo Securities analyst Qian Qimin. 'But the downward pressure didn't appear as big as expected. Investors can expect a turnaround as more stocks become undervalued.' In Taiwan, where the stock market was also closed on Monday for the festival, the key Weighted Index slumped 219.2 points, or 2.88 per cent, to 7,391.37 yesterday, its biggest single-day drop since August 19. Mounting worries of a default on Greece' sovereign debt dragged global markets down sharply on Monday, when the MSCI Emerging Markets Index lost 2.3 per cent. Japan's Nikkei-225 Index gained 0.95 per cent yesterday to 8,616.55 points, rebounding from its lowest close since April 2009 on Monday when it lost 2.3 per cent to 8,535.67 points. The mainland's main index has dived 12 per cent this year following a 14.3 per cent drop in 2010. Beijing's monetary policy tightening have weighed on investors, many of whom cashed out because of expectations of a further drop. However, analysts said the market would hit bottom at the 2,400-point level since stocks would by then be undervalued. In June, Guotai Junan Securities, the only major Chinese brokerage that correctly predicted a fall in the A-share market last year, forecast that the key Shanghai index would fall as low as 2,400 points in the third quarter. 'It is consensus prediction among brokerages that the market would find strong support at the 2,400-point level,' said Essence Securities analyst Liu Jun. 'However, it doesn't necessarily mean that the market would turn into a bullish mode.' Shanghai-listed stocks traded at an average of 14.85 of their 2010 earnings yesterday. According to Bloomberg, Shanghai-listed companies' were valued 11.4 times their estimated profits for this year, the lowest since January 2006. China's consumer price was up 6 per cent year on year in August, down from 6.2 per cent in July. Markets in Hong Kong and South Korea were closed for a public holiday yesterday.