Chinese shares dived on Tuesday, with the benchmark Shanghai Composite Index down more than 3 percent at the end of trading, driven by an exodus of capital from the stock market.
The benchmark Shanghai Composite Index dived 3.47 percent, or 175.56 points, to finish at 4,887.43 points, while the Shenzhen Component Index dropped 3.54 percent, or 626.62 points, to close at 17,075.93 points.
The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, slipped 2.85 percent, or 105.36 points, to end at 3,590.67 points.
During Tuesday's trading, losers outnumbered winners by 776 to 146 in Shanghai and by 1,130 to 260 in Shenzhen.
Combined turnover for the two bourses expanded to 1.7 trillion yuan (278 billion U.S. dollars) during Tuesday's session from Monday's 1.2 trillion yuan.
Analysts attributed Tuesday's drastic fall mainly to 25 IPOs scheduled for this week as investors try to get capital together. Subscribers to the new IPOs see them as a sure way of making money.
Analysts from wlstock.com expected the coming IPOs to lock up nearly 5.7 trillion yuan of liquidity. Under market rules, major shareholders of new stocks are subject to one or two years lock-up before they are permitted to trade.
Market regulator China Securities Regulatory Commission (CSRC) on Saturday banned illicit loans for stock purchases, and announced that margin trading outside the brokerage system would be strictly punished.
Shares from sectors including aviation manufacturing, e-commerce and logistics led Tuesday's market drop.
CRRC Corp, the company formed by the merger of CSR and CNR, China's two leading high-speed railway makers, continued its losing streak on Tuesday. It debuted last Monday, jumping by the daily limit of 10 percent, but it lost now 33 percent after six days of consecutive drops. CRRC dropped by the daily limit of 10 percent to close at 21.58 yuan per share.
