SHANGHAI: China stocks closed lower on Monday as a rate cut in China's lending benchmark failed to lift investor sentiment, with analysts saying its impact on the economy would be limited.
The blue-chip CSI300 index fell 1.5% to 4,880.42, while the Shanghai Composite Index lost 1.1% to 3,593.60.
China cut its lending benchmark loan prime rate (LPR) for the first time in 20 months, matching market expectations, in a bid to prop up the slowing economy.
The one-year LPR was lowered by 5 basis points, while the five-year LPR remained unchanged. Analysts said the decision to keep the five-year rate unchanged showed Beijing preferred not to use the property sector to stimulate economic growth.
"The mini rate cut itself is unlikely to have a big impact on the economy," said Zhiwei Zhang, chief economist at Pinpoint Asset Management. Some analysts expect Beijing could ease further to arrest the economic slowdown.
An index tracking Shenzhen's start-up board ChiNext dropped nearly 3%.
New energy stocks tumbled 4.4%, with new energy vehicles and the photovoltaic industry down 3.9% and 4.6%, respectively.
Coal miners and non-ferrous metal shares declined 3.3% and 2.8% respectively, while the machinery sub-index slumped 3.7%.
Shares of Chinese companies controlled by Zhongzhi Enterprise Group founder Xie Zhikun plunged, after the surprise death of the rags-to-riches tycoon triggered fears of disorder in a business empire spanning mining to asset management.
However, real estate developers gained 0.7%, after the official China Securities Journal said China was urging large private and state-owned property companies to acquire real estate projects from troubled developers to reduce risks that mounting debt piles would destabilise the economy.
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