Stocks fall back after PBOC move to drain liquidity

Stock markets in the Chinese mainland fell back on Tuesday after the central bank drained funds from the banking system.

The benchmark Shanghai Composite Index was down by 16.35 points or 0.77 percent to 2,119.07 points on Tuesday. The Shenzhen Component Index fell by 111.49 points or 1.40 percent to 7,832.47 points.

Combined turnover on the two bourses on Tuesday was 318.53 billion yuan ($51.18 billion), up from Monday's 310.37 billion yuan.

The decline coincided with a move by the People's Bank of China (PBOC) Tuesday to drain funds from the banking system. The central bank said in a statement on its website that it sold 48 billion yuan of 14-day repurchase (repo) contracts on Tuesday.

It was the first time since June 2013 that the PBC had used repos to drain liquidity from the market.

The central bank's move weighed on shares in banks and brokerages on Tuesday. China CITIC Bank declined by 2.49 percent to 4.69 yuan while China Merchants Securities Co declined by 4.29 percent to 11.60 yuan.

Shares in nonferrous companies and liquor makers also underperformed on Tuesday while shares linked to land reform, the Tianjin Free Trade Zone and wearable electronics bucked the trend.

Liquor makers fell back on Tuesday, after a recent rally backed by strong demand for high-end liquor during the weeklong Spring Festival holidays.

China's leading premium liquor maker Kweichow Moutai Co slid by 1.97 percent to 147.03 yuan after gaining almost 12 percent during the previous three trading sessions.

ChiNext, China's NASDAQ-style board for high-tech and fast-growing start-ups listed in Shenzhen, also declined on Tuesday by 13.28 points or 0.85 percent to 1,545.34 points, after hitting a record closing high in the previous session.