SHANGHAI: China’s blue-chip index posted its biggest daily drop in nearly seven months on Monday after touching record highs last week, as investors fretted over high stock valuations and the risk of policy tightening.

China left its benchmark lending rate for corporate and household loans unchanged for a 10th straight month on Saturday, but speculation has been rising that authorities may begin to adopt a tighter policy stance.

China’s blue-chip CSI300 index slumped 3.14% to close at 5,597.33 points, its biggest daily percentage drop since July 24, 2020.

The Shanghai Composite index fell 1.45% to 3,642.44 points.

Liquor shares fell, with heavyweight Kweichow Moutai Co Ltd dropping 7% as foreign investors sold shares through the Stock Connect.

The consumer staples sector slumped 5.96%, the healthcare sub-index dropped 5.15% and the financial sector sub-index shed 1.75%.

Trading activity was elevated, with 48.88 billion shares trading on the Shanghai exchange, about 153.9% of the market’s 30-day moving average of 31.77 billion shares a day. The Shenzhen index ended down 2.08% and the start-up board ChiNext Composite index dropped 4.47%.