SHANGHAI--China shares ended flat Wednesday, with property developers declining after the housing ministry reiterated the central government's earlier rhetoric of keeping a grip on the real estate market.
The benchmark Shanghai Composite Index, which tracks both A and B shares, ended down 0.1%, or 2.37 points, at 2309.55. The Shenzhen Composite Index fell 0.2%, or 1.88 points, to 935.51.
Trading volume in the two markets fell to 108.5 billion yuan from CNY120 billion Tuesday and CNY160 billion Monday, indicating sentiment has become increasingly cautious.
"The downtrend will remain in the short term because of a lack of sufficient fund inflows," said Li Xiaoxuan, a Shenyin Wanguo Securities analyst.
Property developers led the broad market's fall after the official Xinhua News Agency quoted a spokesperson at the housing ministry as saying that Chinese authorities will continue to implement measures to curb the property market "without wavering."
China Vanke dropped 1.4% to CNY8.98, Gemdale Corp. lost 0.9% to CNY6.74 and Beijing Vantone fell 1.5% to CNY3.87.
Still, analysts said investors might have been overplayed the housing ministry's remarks because the central government has shown tolerance for some easing measures by local governments to boost the property sector.
"With property prices almost back to their end-2010 level and likely to remain suppressed due to home purchase restrictions, we believe policy trends should be biased towards relaxation over the next 12 months," Macquarie analysts said in a note.
"An uncertain global environment, flat real estate investment growth, deteriorating consumer confidence and a lack of new economic drivers to buffer GDP growth should put pressure on government to loosen policy," they added.
With regard to the general market, analysts said investors are still juggling concerns over a still weak domestic economy and hopes for further monetary easing measures from Beijing.
"Since the NDRC (China's top economic planning agency) has ruled out the possibility of undertaking another massive stimulus, what investors can anticipate is an interest rate cut," said Huatai Securities analyst Li Wenhui.
As such, "bears and bulls will continue to seesaw either side of the 2300 level of the Shanghai Composite in the short term," he said.
"While investor confidence remains weak after Monday's sharp fall, I think it's relatively safe to buy stocks at the current level," said Zheng Ping, a Minzu Securities analyst, citing China's effort to stabilize capital markets ahead of a leadership reshuffle in the autumn and increasing likelihood that the U.S. will take actions to spur economic recovery.
Gold miners bucked the general market's trend, rising on higher gold prices amid a weaker dollar. Zhongjin Gold jumped 4.2% to CNY24.13, Shandong Gold surged 6.8% to CNY38.00, Zijin Mining gained 2.2% to CNY4.19.
Write to Rose Yu at rose.yu@dowjones.com
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