Chinese shares fell in heavy trade on Monday, with consumer and property companies suffering the most significant losses, driven by economic data and doubts over a report suggesting China may ease mortgage refinancing.

The Shanghai Composite index closed down 1.1 per cent at 2,811.04 points.

China's blue-chip CSI300 index finished 1.7 per cent lower and the real estate index fell 4.1 per cent. The consumer staples sector fell 3.1 per cent and the food and beverage index dropped 3.5 per cent.

Chinese H-shares listed in Hong Kong closed 1.9 per cent lower at 6,211.61, while the Hang Seng Index ended down 1.7 per cent at 17,691.97.

A private survey showed that China's new home prices barely rose in August, while developers China Vanke and Hong Kong's New World Development reported losses.

New World Development shares suffered the largest fall on the Hang Seng, slumping 13 per cent to a two-decade low after the company estimated a net loss as deep as HK$20 billion ($2.6 billion) for the year ended June 30.

China Vanke shares fell 5 per cent after the state-backed property giant reported a core loss of 7.6 billion yuan ($1.1 billion) in the first half on Friday, underscoring the depth of the malaise in the sector.

Analysts also assessed the effect of potential loosening of mortgage refinancing rules which were reported by Bloomberg News on Friday.

"Refinancing with different banks is unlikely to be allowed," Nomura economist Ting Lu said, though he nevertheless expects cuts to mortgage rates that could save borrowers about 100 billion yuan ($14 billion) a year in repayments.

The top three H-share losers were bottled water seller Nongfu Spring, down 5.5 per cent, China Resources Land , down 5.4 per cent, and China Overseas Land & Investment , down 4.7 per cent.

Caixin/S&P Global manufacturing PMI swung back to growth in August, data showed on Monday. Still, a survey of larger companies on Saturday showed activity contracted for a fourth month.

Around the region, MSCI's Asia ex-Japan stock index lost 0.33 per cent, while Japan's Nikkei index closed up 0.14 per cent.

About 34.07 billion shares were traded on the Shanghai exchange, approximately 123 per cent of the market's 30-day moving average. About 3.08 billion Hang Seng index shares were traded, roughly 128 per cent of the market's 30-day moving average.

China's blue-chip CSI300 index finished 1.7% lower and the real estate index fell 4.1%.

Advertisement