By Dong Zhixin (chinadaily.com.cn)
Updated: 2007-11-27 16:53

Jittery Chinese investors continued to dump their shares on Tuesday, sending a key stock index down to its lowest level in more than three months, amid a slump in the global market.

The benchmark Shanghai Composite Index fell 1.97 percent to close at 4,861.11 points, marking a loss of 20.64 percent since peaking on October 16.

In developed markets, a decrease of 20 percent or more in a 12-month period constitutes a bear market. However, analysts said this kind of definition does not apply to China, as emerging markets are prone to big fluctuations.

The latest closing stood below the 120-day moving average deemed vital by those investors keen on technical analysis of the market. That might prompt more selling to prevent further losses, analysts said.

Other indicators also dropped. The Shenzhen Composite Index fell 1.56 percent to 1,239.41, while the CSI 300 Index of major companies in the two bourses declined 1.85 percent to 4,711.15.

Turnover in the two bourses shrank to less than 80 billion yuan, indicating weak investor confidence after a month of corrections. Investors are expected to stay out of the market in the coming days, analysts said.

The slump came as other markets also suffered a major sell-off. In Wall Street, the Dow Jones Industrial Average closed 2.14 percent lower on Monday, while the Hang Seng Index of Hong Kong went down 2.18 percent on Tuesday.

In Shanghai and Shenzhen, the biggest downward forces came from blue chips.

PetroChina continued to slide, dropping 3.61 percent to close at 32.54 yuan per share. The mainland's largest listed company has lost 33 percent since its Shanghai debut earlier this month. Its main rival, Sinopec saw a bigger fall, down 4.35 percent to 20.91 yuan.

Financial shares were also weak. Ping An Insurance tumbled 4.68 percent to 100.98 yuan, followed by a 4.12 percent decrease in China Life to 53.51 yuan. The Industrial and Commercial Bank of China fell 1.03 percent to 7.71 yuan.