The increasing number of initial public offerings (IPOs) since the government lifted a year-long ban on capital-raising led to a slump of 2.97 per cent on the stock market yesterday, casting a shadow on investor confidence in the following weeks.

The benchmark Shanghai composite index closed at 1,612.73 points on the last day of July. Turnover in Shanghai A shares was a moderate 19.4 billion yuan (US$2.425 billion).

Yesterday, A shares continued their downward trend since Friday, when most of the quality stocks started to dive, sparking concern that too many IPOs had kept trading sluggish in July. The trend is expected to further hurt sentiment in August.

"Today's fall is mostly related to the increasingly massive new IPOs such as Poly Real Estate and Daqin Railway. The China Securities Regulatory Commission is accelerating the pace of IPOs, faster than the market expected," Cheng Weiqing, an analyst with CITIC Securities, said.

Just after Poly Real Estate listed on the Shanghai stock market on Monday, Daqin Railway Co Ltd, which launched the second-largest domestic IPO this year in July, announced that it would list on the Shanghai bourse today.

Shares in the new listed Poly Real Estate jumped to 19.30 yuan (US$2.41), up 38.35 per cent from its issue price of 13.95 yuan (US$1.74) on its first day of trading.

The new listing drew large capital from other real estate developers who witnessed a general loss yesterday. Leading real estate developer China Vanke Co Ltd was down by 4.48 per cent to close at 5.54 yuan (69.25 US cents). Financial Street Holding Co Ltd slumped by 7.05 per cent to close at 8.18 yuan (US$1.02).

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