CHINA’S shares yesterday slumped the most in two weeks as volatility returned before the start of a week-long holiday.

    The blue-chip CSI300 index fell 1.7 percent to 3,220.28, while the Shanghai Composite Index lost 1.8 percent to 2,980.43 points.

    The sudden drop came after trading turnover fell to the lowest level in two years as a booming housing market and an equity rally in Hong Kong lured mainland investors.

    The thin turnover also showed that many investors were cautious ahead of the long National Day holiday starting Oct. 1, when the stock markets will close for a week. Margin traders cut bullish bets on shares to the lowest level in more than a month Friday.

    The Shanghai Composite is one of the world’s worst performing stock gauges this year after last summer’s US$5 trillion rout.

    “Investors are selling as the week-long holiday is approaching as they wouldn’t risk holding their shares for such a long period to avoid uncertainty,” said Wang Zheng, Shanghai-based chief investment officer at Jingxi.

    “The other reason is probably the current boom in the property market has siphoned off part of the capital from the stock market,” said Wang.

    All main sectors fell, with real estate and raw material stocks leading the decline.

    Eastern China city Nanjing said Sunday it would restrict home purchases, becoming the latest target of a government crackdown on feverish investment that pushed home prices up in second and third-tier cities. (SD-Agencies)