Shanghai-HK stock connect launch sends shares down

Chinese shares closed lower on Monday after the official launch of a program to connect stock trading in Shanghai and Hong Kong.

The benchmark Shanghai Composite Index dropped 0.19 percent to finish at 2,474.01 points. The Shenzhen Component Index closed at 8,283.8 points, down 0.52 percent.

Total turnover on the two bourses expanded to 354.29 billion yuan (57.69 billion U.S. dollars) from 343.42 billion yuan the previous trading day.

On Monday, the Shanghai-Hong Kong Stock Connect program was launched, giving investors mutual market access, a significant move toward a more open capital market in the Chinese mainland.

Investors are allowed to trade eligible shares listed on either market through local securities firms or brokers with a maximum cross-border volume of 550 billion yuan (90 billion U.S. dollars) and a daily two-way quota of 23.5 billion yuan.

Li Lei, deputy head of a research institute under China Minzu Securities, attributed the drops to investors' cautious attitude toward the launch.

Previously, the mainland stock market has surged, to a large extent in anticipation of the launch, which "has overdrawn the positive impacts of the Shanghai-Hong Kong program," Li said.

The Shanghai Composite Index had climbed more than 8 percent in the previous three weeks ending last Friday.

Banking and coal mining sectors dropped the most on Monday's trading, with the sub-indices down 1.08 percent and 0.55 percent, respectively.

Industrial and Commercial Bank of China, the country's largest commercial bank by market value, dropped 0.79 percent to 3.75 yuan. China Shenhua, the largest coal miner in China, dropped 0.65 percent to 15.39 yuan.

China Vanke, the country's biggest property developer, lost 2.07 percent, while Poly Real Estate, the second largest, tumbled 2.94 percent.