China Shares End Lower; Shanghai Index Hovers Near Year's Low - Wall Street Journal

SHANGHAI--China's shares ended down Wednesday following a third straight day of losses in U.S. stocks as investors remained worried about when the domestic economy will pick up.

The benchmark Shanghai Composite Index, which tracks both A and B shares, ended down 0.5% at 2136.15. The Shenzhen Composite Index fell 0.7% to 887.54.

Traders expect the Shanghai index to continue hovering around 2131, its intraday low for the year, reached yesterday. A small improvement in a manufacturing report from HSBC Tuesday did little to give the market upward momentum.

"The market is entirely reflective of macroeconomic fundamentals and the fact that there's no clear, overarching stimulus policy from the government," says Wu Dazhong, an analyst with Shenyin Wanguo Securities. "The Shanghai index may continue in this weak state for at least one or two months."

"The fact that the index only recently broke through its previous low for the year at 2132 shows that sentiment is extremely weak at the moment," said Minsheng Securities analyst Zheng Pin.

The A-share market also tracked losses in stocks overseas. Overnight, the Dow Jones Industrial Average slid more than 100 points after rating agency Moody's cut its credit outlook for three European countries, including Germany.

Chinese property stocks led losses today on expectations that a government investigation of property markets in 16 cities in 12 provinces may lead to further tightening measures.

Eight teams of investigators will review policies in cities and provinces including Beijing, Tianjin, Shanghai, Guangdong province and Chongqing "to further ensure that property tightening measures are implemented, speculative housing demand is curbed and the effects of the property tightening measures are strengthened," the State Council said in a statement Tuesday. The stance from central government officials that property tightening measures must be maintained follows a rebound in housing prices and sales in some cities in June.

China Vanke was down 2.5% CNY9.10, Gemdale fell 3.0% to CNY5.87 and Shanghai Xinmei was down 3.5% at CNY7.41.

Blue-chip steel stocks also declined, reflective of downbeat sentiment in the property sector. Angang New Steel lost 1.1% to CNY3.67 and Wuhan Iron & Steel lost 0.8% at CNY2.57 while Baoshan Iron & Steel was nearly flat at CNY4.11.

Write to Chao Deng at chao.deng@dowjones.com