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Chinese shares plunged again on Monday, with the major Shanghai Composite Index falling by 8.26 percent after heavy falls last week.

Investors were left rubbing their eyes after a cumulative fall of over 15 percent since the bourses struck a high point of 4335.18 points on May 29.

The major Shanghai Composite Index, which tracks both yuan-denominated A shares and hard-currency B shares, closed at 3,670.4 points, down 330.34 points or 8.26 percent, from the previous close last Friday.

The slump is the largest decline since Feb. 27 when the index dropped by 8.84 percent.

The smaller Shenzhen Component Index saw a 7.76 percent drop on Monday, closing at 11,468.46 points, down 964.23 points.

The two bourses reported total turnover of 225.89 billion yuan for the day, down sharply from the previous trading day of 346.58 billion yuan.

About 800 stocks, or about one third of the total, dropped by the maximum 10 percent.

Heavyweights were caught up in the maelstrom. SinoPec fell to the 10 percent daily limit while the Bank of China and the Industrial and Commercial Bank of China nosedived 9.25 percent and 8.1 percent respectively.

Analysts said the government's decision to raise the stamp tax on securities trading from 0.1 percent to 0.3 percent was undoubtedly a factor in the fall.

The Shanghai Composite Index dropped by 6.5 percent right after the policy was announced.

A number of experts contended that the Chinese stock market would experience a period of readjustment but that the market mood would remain buoyant.

Three major securities newspapers in China carried similar commentaries on Monday, calling on investors to keep their feet on the ground and understand the reasons behind the stamp tax policy.

Commentators said that the continuous rise of Chinese shares over the last 15 months is irrational and so is the drastic drops of the past week.

The two bourses have risen by 300 percent in the past two years and the Shanghai Composite Index shot up from 3,000 points to 4,000 points in the space of just 50 trading days this year.

Cao Fengqi, director of the finance and securities research center of Beijing University, said that the government's policy is a sound one aimed at ensuring the steady development of the stock market by fighting wild speculation.

Statistics from the China Securities Regulatory Commission show that the turnover rate for A shares on the Shanghai Stock Exchange is nearly 400 percent and nearly 440 percent on the Shenzhen Stock Exchange. That means all A-shares stocks were traded four times in the first four months.

Ha Jiming, chief economist with China International Capital Corporation Limited, said that the stamp tax policy would affect investors greatly in the short term but is good for the development of the capital markets in the long run.

Editor: Yan