The Shanghai Composite Index fell 4.03% to 3,914.20 yesterday, the steepest decline since an 8.26% slump on June 4, state media reported. The downturn came after recent legislative talks to reduce or abandon the personal income tax on bank savings and plans to issue US$200 billion in special bonds to help set up an overseas investment firm – both moves that could make stocks less attractive. "The influence (brought by concerns over the bond sale) is largely on the physiological level" rather than on the liquidity side, said Peng Yunliang, an analyst at Shanghai Securities Co. Recent reports of new financial products, which many mainland investors associate with speculation, have caused similar drops.