China stocks tumble over property bubble fear

Investors look through stock information in the trading hall of a securities firm in Yinchuan, capital of northwest China's Ningxia Hui Autonomous Region, Feb. 24, 2014. (Xinhua/Li Ran)

Chinese shares plunged on Monday over fears of a property bubble burst and the continued depreciation of the Chinese yuan.

The benchmark Shanghai Composite Index fell 1.75 percent, or 37.01 points, to finish at 2,076.69. The Shenzhen Component Index lost 2.68 percent, or 208.02 points, to close at 7,542.53.

Combined turnover on the two bourses expanded to 256.6 million yuan (41.93 billion U.S.dollars) from 232.8 billion yuan on the previous trading day.

Real estate stocks led the fall after media reports over the weekend said that real estate developers in east China's Hangzhou City lowered house prices and the Industrial Bank halted its loans to some real estate business.

The poor performance of the property sector also followed government data released on Monday that showed home prices dropped month on month in more Chinese cities in January, signaling a gradually cooling property sector.

China Vanke, the nation's largest listed property developer, fell 6.56 percent. Poly Real Estate Group Co., Ltd., another real estate giant, fell by 8.51 percent.

Market sentiment was also dented by the continued depreciation of the Chinese currency. On Monday, the Renminbi, or yuan, continued to decrease against the U.S. dollar, marking decline for a fifth trading day and weakening 13 basis points to 6.1189 against the dollar.

Analysts said concerns of an economic slowdown and impact from U.S. tapering of quantitative easing have dampened expectations for the appreciation of the Chinese currency.

Shares related to environmental protection and medicine led the gains as heavy smog hit north China starting last week and is expected to last for several days. Shandong Xinhua Pharmaceutical Company Limited gained 10.07 percent to meet the daily rising cap and reached 5.9 yuan per share.

The ChiNext Index, a Nasdaq-style board tracking China's growth enterprises, gained 1.34 percent, or 20.36 points, to end at 1,540.03 points on Monday.