Chinese stocks were again under pressure yesterday as investors remained unsettled by concerns about inflation and supplies of new equity.

The Shanghai composite index dropped 2.2 per cent to 2,957.32, taking its decline over the past three days to 11 per cent. The slide was triggered by a 100 basis point increase in the bank reserve ratio requirement. The benchmark stock index has now fallen 52 per cent from a record high struck last October.

News that the annual rate of consumer price inflation had fallen to 7.7 per cent went largely unheeded by the market, as the figures had been leaked. There were worries that consumer inflation would accelerate due to rising factory gate prices.

Meanwhile, there were worries that the forthcoming $6bn initial public offering by China State Construction Engineering could divert funds from the market.

Indeed, there were rumours that the IPO could be delayed because of poor market conditions.

PetroChina, the country’s biggest company, fell by 3.3 per cent to Rmb15.37 and its rival oil company, Sinopec, lost 3.4 per cent to Rmb11.52.

Shanghai’s slump dragged down Hong Kong in its wake.

The Hang Seng index closed 1.3 per cent lower at 23,023.86 and the main sub-index of mainland companies listed in the territory was 1.4 per cent lower at 12,522.89.

The list of worst-performing stocks was dominated by mainland companies. China Mobile fell by 1.4 per cent to HK$107.40, China Life Insurance lost 2.4 per cent to HK$28.40 and China Construction Bank was down 0.5 per cent to HK$6.53.

The debut of A8 Digital Music, a provider of mobile phone ringtones and other music, created one bright spot. The shares closed 35.3 per cent above their offer price, near to the day’s highs, at HK$2.58.