Confidence is weakening in the Chinese market after the fourth straight session of losses on Monday.

The Shanghai Composite Index dropped 1.63 percent to a five month low of 2224.11, energy and construction material stocks led decliners due to slowdown fears.

Market Factors:

Citic Heavy Industries has priced its initial public offering at 4.67 yuan (74 U.S. cents) per share, which values the heavy machinery maker at 16.19 times earnings. The IPO, China's largest so far this year, will take subscriptions on Tuesday and Wednesday. China still has a chock-full IPO pipeline, with 703 companies waiting for regulatory approval, 119 firms that have been approved but are yet to list.

Stocks to Watch:

Property Stocks - Central China's Henan province has issued measures aimed at boosting demand for property. The highlights include a 30 percent discount on mortgage rates for first-time homebuyers and giving developers three more months to repay loans. The move seems slightly incongruous with central government’s repeated mantra that there will be no loosening of property curbs. Meanwhile, analysts expect more property curbs to be announced if housing prices rebound.

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