Persistent concerns about the government’s credit tightening largely contributed to the new three-month low that the country’s shares witnessed on Wednesday, with most of the bigwig financial companies leading the fall.

A 32.78 points, or 1.1 percent, fall was noted by the benchmark Shanghai Composite Index, which dropped to 2986.61 – marking the index’s lowest level since its 2960.47 level that it fell to in October last year.

The index, which tracks both A and B shares, has fallen as much as 5.6 percent in the four bygone sessions; and data from the Shanghai Stock Exchange reflects that China’s shares are trading at an average 26 times P/E ratio. Meanwhile, the Shenzhen Composite Index also fell to 1103.64 points, indicating a drop of 0.8 percent or 8.77 points.

With analysts opining that the Shanghai index will continue consolidating around 3000 this week, due to reservations about further monetary tightening, Gary Goh, a trader at a Singapore-based securities firm, noted: “There are expectations of an interest rate hike, and the sooner it comes, the better for the markets because there will be less uncertainty.”

Jin Lin, an Orient Securities’ analyst, expects the net profit of Chinese banks to witness an average growth of 30 percent in 2010; and said that a credit tightening environment might possibly benefit domestic lenders - the way they did under similar situations in 2007 and 2008.