July 27 (Reuters) – China’s key stock index closed down half a percent on Tuesday, as expected large initial public offerings (IPOs) weighed on sentiment and analysts said the index was readjusting after six consecutive days of rises.
The Shanghai Composite Index .SSEC ended at 2,575.4, after closing up 0.7 percent on Monday, snapping a rally inspired by confidence that China would maintain stable economic policies.
Large fundraisings, including Agricultural Bank of China’s (601288.SS) hefty IPO, have weighed on the index, while Beijing’s clampdown on the speculative property sector triggered a near 30-percent drop in the index this year, until the recent rebound.
Sentiment was dampened on Tuesday after the China Securities Regulatory Commission said it would review an IPO application for ShanXi Securities, but analysts said new issuances were unlikely to halt market gains substantially.
“After Agricultural Bank’s huge listing, other listings are not likely to unsettle the market much. Today’s fall is because there is a need for some technical adjustment, this is normal,” said Wen Lijun, analyst at Nanjing Securities.
Wen said in the near term the index could extend its recent rally to 2,800 points on optimism that economic policies will remain stable for the rest of the year to bolster growth.
Volume slipped to 85 billion yuan ($12.54 billion) from Monday’s 88 billion yuan. Turnover had picked up significantly in the previous week, with analysts citing the potential for further rises.
Losing Shanghai shares outnumbered gainers 574 to 306. (Reporting by Farah Master; Editing by Jacqueline Wong)