The key stock index of China had dropped by more than 3 per cent in heavy trade and it resulted in a few investors fleeing the market in the midst of escalating worries that the government would be taking steps to compress the surging asset prices.

The index saw its biggest drop in a day in almost three months and fell about 3.5 per cent on Thursday from the 2.7 per cent drop that was seen on Wednesday. The clampdown is expected by the first quarter in the following year and it is also assumed that the government would share supplies and the property policies are expected to be cancelled.

The fall was led by the bank, with concerns about the reduction of lending and a probable increase of funds the following year which will help in shoring up the capital.

It has also been reported that the major cause for the fall of the stocks was due to the steel and property stocks, with the property stocks leading the loss and steel stocks following right behind, and then came the coal stocks.