Major stock indices on the Chinese mainland closed lower on Monday as traders responded to the Chinese securities regulators' efforts to slow down the rally in equities, said Timothy Pope, a China Global Television Network (CGTN) market analyst.
The benchmark Shanghai Composite Index down 0.09 percent to 4,132.61 points, while the Shenzhen Component Index closed 0.85 percent lower at 14,316.64 points.
Pope said that the stock market decline was caused by a crackdown on suspected market manipulation and a drop in technology stocks.
"What I think we're seeing is the markets continuing to respond to regulator and exchange efforts to slow down the rally in equities a little bit. The Shanghai Composite Index ended fractionally lower today and the Shenzhen Component was off by around 0.9 percent. There's been a bit of a flurry of regulatory action so far this year. The biggest move of course being the change to margin lending rates a couple of weeks ago. We've also seen some firm action taken against investors suspected of market manipulation. Just on Friday, we saw a billion yuan fine handed down to an individual investor, and exchanges have also been publishing notices of hundreds of what they've termed abnormal trades. And it seems like this is working, it's definitely slowed the pace of gains, but hasn't prompted a broad-based correction. What we have seen is investors switching out of tech stocks. They have been a pretty persistent drag on the markets over the last two weeks, and that continued today. A sub-index tracking Chinese semiconductor shares dropped 2.3 percent and the country's most valuable semiconductor stock - Cambricon - shed 2.6 percent," Pope said.
Pope said the fluctuations in metal and crude oil prices on the back of geopolitical uncertainty has also played a role in the market downturn.
"The other big trend this month has been metals prices, with Venezuela, the whole Greenland madness, or was it Iceland, and that's created a lot of geopolitical uncertainty. Gold has cracked 5000 dollars an ounce for the first time. Onshore Chinese gold prices have been even higher, so Chinese mining stocks have been going gangbusters and we're really seeing that supporting the markets today. Chinese oil stocks were also up, as well. We saw crude prices rising and also because domestic refiners are probably going to have to pick up a bit of slack as imports from both Venezuela and Russia have been dented in the new year," he said.
Chinese stocks close lower on stricter regulations: market analyst
