Chinese Stock Market in Trouble

Chinese stocks dropped to a six-week low Tuesday, dragged down mainly by liquor producers and oil refineries.

The benchmark Shanghai Composite Index dropped 0.15 percent, or 3.42 points, to end at 2,347.18.

The Shenzhen Component Index dropped 1.05 percent, or 104.75 points, to end at 9,841.38.

Combined turnover on the two bourses expanded to 124.97 billion yuan (19.89 billion U.S. dollars) from 107.4 billion yuan the previous trading day.

Losers outnumbered gainers by 510 to 373 in Shanghai, and by 740 to 625 in Shenzhen.

Premier Wen Jiabao said Monday at a State Council conference on anti-corruption work that the government will reform the management of administrative expenses. As one of the measures, the government will ban purchases of cigarettes, expensive liquors and gifts using public funds.

Liquor producers led the drop with the sub-index for the sector dropping 3.89 percent from the previous trading day.

Kweichow Moutai, a leading producer of high-end liquor in China, plunged 6.37 percent to 201.5 yuan per share, while Wuliangye, another industry leader, slid 6.5 percent to 34.5 yuan.

Oil refineries were also among the largest losers with the sub-index down 0.82 percent. PetroChina Co. fell 0.2 percent to close at 10.03 yuan, while China Oilfield Services Limited dropped 3.49 percent to 16.89 yuan.

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