CONCERNS about companies’ weakening profitability this year and the prospect of more monetary tightening by the central bank sent China’s shares sharply lower for the second straight session Thursday.

The benchmark Shanghai Composite Index ended down 2.4 percent at 3,971.26, its lowest level since July 19, when it settled at 3912.94. The Shenzhen Composite Index fell 3.3 percent to 1,248.19.

Turnover for the Shanghai market rose to 97.64 billion yuan (US$13.75 billion) from 89.90 billion yuan Wednesday.

Analysts said the local market Friday will look to Wall Street for cues, adding the Shanghai Composite Index will likely consolidate between 3,800 and 4,100 after the two-day decline.

On Thursday, there were waves of panic selling after the Shanghai Composite Index fell below psychological support of 4,000 in the morning and early afternoon, analysts said. The index fell as low as 3,902.25 intraday, but regained some ground before the close on bargain hunting by institutional investors, they said.

Li Nian, a strategist at Shenyin Wanguo Securities, said the magnitude of the decline wasn’t surprising given the potential slowdown in corporate profit growth this year.

He said average corporate profit growth will likely be 30 percent this year, compared with about 50 percent last year.

A fund manager at a joint-venture fund company said local mutual funds had experienced small redemptions in recent sessions, but most investors are still willing to hold stocks at a loss.

(SD-Agencies)