CHINA’S shares had their worst performance in eight weeks yesterday, with a major index tumbling more than 2 percent and breaching a key technical support level, as investors who are increasingly worried about the economy took profits from a long rally.

    Although no specific event appeared to trigger the abrupt sell-off, traders and analysts listed several contributing factors, including reduced stimulus hopes, rising credit risks and lofty valuations of small-caps.

    The Shanghai Composite Index slumped 2.31 percent to 2,972.58 points, breaching 3,000 — seen by many as a key technical support level. The blue-chip CSI300 index erased some earlier losses and ended the day down 1.77 percent at 3,181.03, aided by a late reversal in banking stocks.

    Small-cap shares were among the worst casualties, with Shenzhen’s startup board ChiNext shedding 5.60 percent.

    The market had bounced roughly 15 percent off Feb. 29 lows, buoyed by upbeat first-quarter economic data, including industrial profit, housing prices and new loan growth, so yesterday’s plunge was a jolt for traders.

    But the rebound risks losing momentum. Traders and analysts cited a number of possible reasons for selling, from short-term liquidity pressures to worries about less-than-stellar figures as first-quarter earnings results roll in.

    “From a purely technical perspective, current trading volume is too small to lift indices upward further,” said Samuel Chien, a partner of Shanghai-based hedge fund manager BoomTrend Investment Management Co.

    And in terms of fundamentals, “there’re still too many problems in China’s economy... while many stocks are too expensive,” said Chien. (SD-Agencies)