Real estate stocks drag market down

Chinese stocks retreated on Wednesday from an earlier rally, dragged lower by declines in the real estate sector amid stricter-than-expected government controls over the property market.

The benchmark Shanghai Composite Index fell 0.67 percent to close at 2,932.51 points. The smaller Shenzhen Component Index dropped 0.77 percent to 9,326.62 points, while the blue chip CSI300 index ended 0.9 percent lower at 3,835.36 points.

Total turnover on the two major bourses shrank to 357.61 billion yuan (US$51.94 billion), compared with 384.24 billion yuan in the previous session.

China will adhere to the principle of "housing is for living in, not for speculation," implement the long-term mechanism to maintain the sound development of the real estate market, and not use real estate as a short-term means of stimulating the economy, according to a meeting held by the Political Bureau of the Communist Party of China (CPC) Central Committee on Tuesday.

As a result, stocks in the real estate sector led the fall on Wednesday, with Shanghai Shibei Hi-tech Co tumbling by the daily limit of 10 percent and China Calxon Group Co falling sharply by 9.21 percent.

Building material firms were also among the biggest decliners. D&O Home Collection Co lost 8.38 percent and Guangdong Tapai Group Co shed 4.13 percent.

The food and beverage sector, non-bank financial shares and auto companies all posted losses.

On the newly launched STAR Market, 23 of the total 25 companies performed well, with only Shanghai MicroPort Endovascular MedTech Co and Micro-Tech (Nanjing) Co dipping by 1.89 percent and 1.54 percent.