Chinese stocks stumbled to a weak close on Wednesday as a recovery in equities appears to have been cut short due to worries over prospects in equity markets going forward. The Shanghai Composite Index dropped 3.03 per cent to finish at 3,805.7 points, as the market-wide weakness offset a modest gain in large-cap stocks in oil, banks, and insurance. Shenzhen's Composite Index dominated by small and mid-cap companies gave up 4.22 per cent to end at 2,058.84. The CSI 300 Index fell 3.54 per cent to close at 3,966.76. The ChiNext Board of technology companies dropped 4.99 per cent to 2,590.03. “Investors started to apparently trying to reduce risk by moving into the banking sector, which has historically had lower volatility than the overall market,” said Gerry Alfonso, a trader at Shenyin Wanguo Securities in Shanghai. Construction-related stocks led the declines in the mainland market amid growth concerns, while in Hong Kong, brokerages were the worst performing sector as investors took profits. “Multiples have corrected massively post the sharp decline and has started to offer value. Yet markets tend to overshoot. A further correction, which we estimate in the order of roughly 20 per cent, is possible which would spark even more action from authorities,” said AXA Investment Managers in a research note released on Wednesday. China’s gross domestic product (GDP) grew by 7 per cent in the second quarter, beating market estimates of 6.8 per cent. Watch: Chinese GDP stable at 7 per cent growth Yet some economists attribute the above-consensus growth to the surging profits in financial sector activity, which does not reflect a fundamental improvement of the Chinese economy and could be short-lived. In Hong Kong, the Hang Seng Index retreated slightly by 0.26 per cent to close at 25,055.76, with HK$105 billion shares exchanging hands, down from Tuesday's HK$126 billion. Shares in BOC Hong Kong jumped 2.8 per cent to a 5-day high of HK$31.45, while Cheung Kong Property Holdings added 1.77 per cent to a 10-day high of 66.25. Extending the weakness from China's stock markets, the H-share index, a gauge of Hong Kong-listed mainland companies, declined 1.31 per cent to 11,681.20, dragged by downbeat performance seen in the share price of Citic Securities and Great Wall Motor, of which each dropped more than 5 per cent.