Shanghai stocks dragged down by iron and steel shares today

Shanghai stocks continued to retreat today, dragged down by resource stocks, especially the iron and steel counters.

The Shanghai Composite Index lost 0.53 percent to close at 3,353.62 points, and the turnover shrank to 252.91 billion yuan (US$38.67 billion).

Iron and steel companies were among the biggest decliners. Xinyu Iron & Steel Co Ltd fell by 9.87 percent to 6.12 yuan and Bengang Steel Plates Co Ltd dipped 9.77 percent to 6.37 yuan.

Non-ferrous metal shares also dropped, with Western Gold Co Ltd slumping by the daily limit of 10 percent to end at 23.63 yuan. Yunnan Aluminium Co Ltd lost 9.97 percent to 14.45 yuan.

The coal companies descended as well. Anhui Hengyuan Coal Industry Co Ltd shed by 7.38 percent to 11.55 yuan. Shanxi Coking Co Ltd fell by 6.76 percent to close at 10.75 yuan.

Shanghai stocks extended the decline with a weekly drop of 0.35 percent.

Zhao Huan, chief analyst of the Fortune Securities, said in a note that "although cyclical shares declined recently with the weak economic data, we can still see them in an positive way in the context of the supply-side reform."

"Meanwhile, investors should be more careful as cyclical stocks can be strongly influenced by trends. Once the trends deviate too far from the fundamentals, cyclical shares would face an inevitable risk of price adjustment," he said.