KBC-Goldstate sells shares in Chinese commodity firms

KBC-Goldstate Fund Management Co is selling shares in Chinese commodity producers and adding to cash, hunkering down for further declines in the benchmark index after tighter credit policies spurred a drop of 10 percent this year.

"Most institutional investors think the market will fall further and they feel uncomfortable with the current policies," Larry Wan, deputy chief investment officer at Shanghai-based KBC-Goldstate, a joint venture with Belgium's biggest money manager, said in an interview. "The market could fall to 2,500 or 2,100 at this point. Who knows?"

The Shanghai Composite Index fell 1.9 percent on Friday, adding to this year's loss of 10 percent, making it the seventh-worst performer among the world's 94 benchmarks tracked by Bloomberg. Friday's losses were led by energy and commodity producers amid concern faltering economic growth will prevent the nation's exports from sustaining a recovery.