"The falls in the two indices reflect concerns about China's policy outlook and the sustainability of its economic rebound," said Qinwei Wang, a China analyst at Capital Economics.
China puts brakes on its housing market
Property and financial stocks have led the decline after Beijing stepped up efforts to rein in China's red-hot property market.
The new measures, announced in early March, include an elevated income tax on homeowners who profit from the sale of a property. Higher interest rates and down payments will be demanded for the purchase of a second home in cities with rapidly rising real estate prices.
The government actions have taken a toll. The Shanghai Stock Exchange Property Index, a broader measure of property developer performance, is down 9.4% on the year.
China's economy is still expanding at 7% to 8% a year, but the rate of growth has slowed from pre-recession levels often in excess of 10%. Even with relatively strong growth, there is some unease about weakness in the broader economy. Inflation indicators have spiked in recent months, contributing to investors' worries.
Analysts have also noted that retail investors in China have largely abandoned stocks in recent years, and are instead seeking out higher returns in alternative investments.
Among the top choices are physical property, wealth management and trust products that sometimes offer more lucrative returns. Anecdotal evidence suggests retail investors are also diverting funds to unregulatedlending outlets and foreign real estate.