China stocks fall after risk warning

Chinese stocks fell Thursday in heavy trade after regulators sent out the second warning on stock investment risks in less than two weeks.

The Shanghai Composite Index lost 0.54 percent to close at 4,131.13 points after touching an all-time high of 4,208 in the morning trading. The Shenzhen Composite Index dipped 0.72 percent to 1,215.16.

The Shanghai and Shenzhen 300 Index of major companies was down 0.49 percent to 3,919.75. The index for B-shares in Shanghai nosedived 7.98 percent to 297.56.

The decline came after the China Securities Regulatory Commission (CSRC) sent out a notice on Wednesday, demanding securities firms educate individual investors on risks. The CSRC issued a similar notice on May 11.

The latest notice ordered the brokerage firms to set a budget for investor education and decide on the education material they should give potential investors. The announcement also called for the establishment of an investor corner in the firms' branches, focusing on risk alerts, securities laws and regulations, as well as basic knowledge.

Also on Wednesday, former US Federal Reserve Chairman Alan Greenspan said China's stock market was unsustainable and he expected a dramatic contraction at some point.

More than 600 stocks fell while 253 others rose in the Shanghai Stock Exchange. In Shenzhen, 438 were down as 175 went up.

Despite the fall, bank shares staged a strong performance. Industrial Bank rose 2.41 percent to close at 30.21 yuan per share, followed by China CITIC, which gained 1.21 percent to 10.86 yuan.

Bank of China edged up 0.86 percent to 5.88 yuan, while the Industrial and Commercial Bank of China rose 0.72 percent to 5.56 yuan.

Insurance shares were weak, with China Life dropping 1.69 percent to 38.98 yuan and Ping An Insurance of China shedding 2.79 percent to 62.42 yuan.

In the energy sector, Sinopec fell 1.35 percent to 12.45 yuan, as Shenergy Group was down 4.16 percent to 19.37 yuan.

Trading was heavy, with the volume hitting 257.2 billion yuan in Shanghai and turnover reaching 132.3 billion yuan in Shenzhen.