CHINA’S benchmark indices slumped roughly 3 percent yesterday in their worst daily performance in five weeks as a correction in small-caps deepened through the day, triggering an afternoon selloff in the broader market.

    The blue-chip CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 2.9 percent to 3,473.25, while the Shanghai Composite Index lost 3.1 percent to 3,320.68 points.

    For both indices, the plunges were the biggest since Sept. 15.

    “The correction, which is technical in nature, is natural after the strong rebound we saw recently. Many stocks were up by their limit for several consecutive days,” said Samuel Chien, partner of Shanghai-based hedge fund BoomTrend Investment Management Co.

    Chien said he expected the market to remain volatile.

    The root of yesterday afternoon’s selling binge was the startup board ChiNext, which tumbled more than 6 percent on profit-taking, weighing on the Shenzhen market.

    The tech-heavy board had come back about 40 percent from its mid-September low, leading the rebound in the broader market.

    But with ChiNext shares trading at more than 80 times their earnings, many questioned sustainability of the rally. Such controversy was reflected in the board’s trading volume, which hit a record high yesterday.

    All main sectors, with the exception of banking, ended yesterday’s session down.

    Gerry Alfonso, director at Shenwan Hongyuan Securities Co., attributed the strength in banking stocks to expectations of further cuts in banks’ required reserve ratios, which would be “clearly a positive development for the sector.”

    Heavily bruised sectors include IT, energy and commodities.

    (SD-Agencies)