China Shares Fall to Over 3-Year Low on Concerns Over Domestic Economy - Wall Street Journal

SHANGHAI--China's shares ended at their lowest level in more than three years Thursday, pushed down by investor concerns over a domestic economic slowdown amid the euro-zone debt crisis.

The benchmark Shanghai Composite Index, which tracks both A and B shares, finished down 0.5% at 2126.0, its lowest close since March 9, 2009 when the index ended at 2118.75. It has now finished in negative territory for four out of the past five sessions, and Thursday was the second session this week that the index has breached a low for the year.

The Shenzhen Composite Index fell 0.8% to 880.76.

Traders said that while the market expects another cut this month in the funds that banks are required to keep in reserve, sentiment is still low. China's economy has remained weak despite recent monetary policy measures from Beijing, including two interest rate cuts by the central bank, they said.

"The Shanghai index will likely stay near the year's low on a lack of strong stimulus policy from Beijing," said Pei Xiaoyan, an analyst with United Securities.

Apart from China's recent rate cuts, the government has also tried to support the market by proposing plans to cut stock trading fees and encouraging the nation's pension fund to allocate more money for investments in stocks. These measures have generally met with positive but short-lived reactions from the market.

"Investors are waiting for domestic economic data in early August to give the market direction," said Zhu Kai Kai, an analyst with Soochow Securities.

Trading volume for the Shanghai Composite Index was 44.9 billion, higher than 41.1 billion on Wednesday.

Property companies added to their recent losses as investors continued to expect the government to maintain pricing controls in the sector.

China Vanke was down 2.1% at CNY8.91, Gemdale fell 2.7% to CNY5.71 and Poly Real Estate fell 3.9% to CNY10.72.

Railroad companies, which were up earlier in the session because of hopes that China's plans for building out its railroad network were back on track, were dragged down by the pessimism over the economy.

The state-run Xinhua News Agency reported Wednesday that China aims to complete a high-speed railway network, stretching more than 40,000 kilometers, by the end of 2015.

China Gezhouba Group finished down 0.8% at CNY6.01, while China Railway Construction was down 0.6% at CNY4.78.

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