Shanghai stocks fell yesterday as investors turned cautious ahead of a batch of initial public offerings next week.
The Shanghai Composite Index closed 0.34 percent lower at 3,636 points, reversing from a gain of as much as 0.6 percent in the last hour of trading.
Ten companies will start their IPO subscriptions next week, which is expected to freeze around 1 trillion yuan (US$156 billion) in funds, analysts said.
"The market lacks impetus for a rally as new share sales are coming to divert funds," Zhao Youqi, analyst with Changjiang Securities, said in a note yesterday.
Zhao said market sentiment was also hit by the move to minimize stock market leverage.
Caixin magazine said yesterday that China's securities regulator required brokerages to stop offering leverage lending to clients through total return swaps.
The regulator earlier this week imposed tighter rules on margin financing, whereby investors have to put down 100 percent worth of assets as collateral for margin loans, up from 50 percent.
