Sentiment is cautious because investors are worried that corporate earnings growth would have hit a low in the second quarter, and some companies would report earnings that are lower than expected. Sentiment has turned cautious after Dong-E-E-Jiao and Han's Laser Technology Industry, both blue-chip stocks, issued surprise warnings on Monday that their first-half profits might have more than halved. Dong-E-E-Jiao, a maker of donkey hide gelatin, tumbled 5.6% after slumping by the 10% daily limit on Monday, while Han's Laser shed 2.1% to 31.78 yuan, extending its 10% decline recorded a day earlier.
Liquor distillers were also a drag on the market, with a gauge of consumer stocks dropping 1.3% to emerge as the worst performer among industry groups. Luzhou Laojiao retreated 3% to 84.90 yuan. Jiangsu Yanghe Brewery Joint-Stock lost 1.3% to 127.13 yuan.
Kweichow Moutai, the world's most valuable distiller, fell 0.8% to 968 yuan before its first-half result on Wednesday. The distiller said on Friday profit for the six-month period probably increased by 26% from a year earlier.
CURRENCY NEWS: China yuan strengthened against greenback on Tuesday, despite softer midpoint fixing by central bank. Prior to the market opening, the People's Bank of China (PBoC) set the midpoint rate at 6.871 per dollar, 0.05% softer than the previous fix of 6.8677. In spot trade, the yuan opened at 6.8750 per dollar and was changing hands at 6.8737 at midday.
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