Mainland markets continue to slide amid liquidity concerns

Stock markets in the Chinese mainland continued falling Tuesday, following a further move by the central bank to tighten liquidity and with the yuan still sliding.

The benchmark Shanghai Composite Index fell by 42.47 points or 2.04 percent to 2,034.22 points on Tuesday. The Shenzhen Component Index declined by 238.59 points or 3.16 percent to 7,303.95 points, the lowest level in eight months.

Combined turnover on the two bourses on Tuesday was 333.35 billion yuan ($54.52 billion), up from Monday's 256.60 billion yuan.

On Tuesday, stock markets extended Monday's fall due to concerns over tightening liquidity. The oil, financial, aerospace, auto, agriculture, media and liquor sectors all declined, with almost 100 stocks falling by the daily limit of 10 percent.

Market analysts said there were also concerns over the continuing decline of the Chinese currency.

The yuan saw a sharp drop against the US dollar last week and continued to slide on Monday, marking a fall for five consecutive days.

On Tuesday morning, the People's Bank of China (PBC), the central bank, continued to drain cash from the money market via repurchase (repo) contracts.

The PBC issued 14-day repos worth 100 billion yuan, having drained 108 billion yuan last week through the same operations.

Industrial Bank Co confirmed late on Monday that it will delay lending to development projects until March, adding to concerns over a slowdown in the property sector.

The property sector fell by 2 percent Tuesday, after falling almost 5 percent on the previous trading day.

ChiNext, China's NASDAQ-style board for high-tech and fast-growing start-ups listed in Shenzhen, hit a record high during trading but fell back sharply, dropping by 4.37 percent or 67.33 points to 1,472.69 points on Tuesday.

Nearly 50 stocks, including Shanghai Wangsu Science & Technology, declined by the daily limit of 10 percent on Tuesday.