Liquidity crunch, loan limits stop market rally

SHANGHAI: Chinese stocks plunged 5 percent yesterday, the biggest one-day drop in eight months, on the back of capital diversion from the mega debut of China State Construction Engineering Corp (China Construction) in Shanghai and concerns over bank lending restrictions.

The benchmark Shanghai Composite Index sank 171.94 points to 3,266.43 points. It dropped as much as 7.7 percent in the afternoon session. The smaller Shenzhen Component Index lost 5.54 percent to 13,070.6 points.

Investors' selling spree pushed the combined turnover on the two bourses to a historical new high of 437.3 billion yuan.