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[SHANGHAI] Chinese shares closed down more than four per cent on Tuesday, as investors fled the market on worries over growing risk following a recent rally and concerns about liquidity, dealers said.
The benchmark Shanghai Composite Index plunged 4.06 percent, or 181.75 points, to 4,298.71 on turnover of 805.6 billion yuan (S$176 billion).
The Shenzhen Composite Index, which tracks stocks on China's second exchange, dropped 2.79 per cent, or 63.77 points, to 2,217.89 on turnover of 536.2 billion yuan.
More than 20 companies plan to issue new shares this week, according to the securities regulator, which tends to drain funds from the rest of the market.
"Tight market liquidity triggered a pullback in Shanghai," Northeast Securities analyst Shen Zhengyang told AFP.
"The market has gone up too fast recently and investors took profits after state media warned of market risks."