U.S.'s advanced artificial intelligence technology embargo on China and an intensifying Israel-Gaza war also weighed on market sentiment.

Country Garden did not update its investors on the status of its debt servicing. A $15.4 million coupon on a $500 million bond went unaddressed, with the company remaining mum even after the 30-day grace period expired this week. 

The developer rejected rumors that some key founding family members had left the country, SCMP reports.

Meanwhile, according to Goldman Sachs, average home prices in 70 medium and large-sized Chinese cities declined 1.4% month on month, easing from a 2.8% drop in August.

In a note to clients on Thursday, Nomura analyst Jizhou Dong flagged the readings, which showed continued weakness in almost every aspect of the property market. 

Dong also expressed concern over the seemingly limited willingness of the central and local governments to introduce more policies to stabilize sales and investments.

The market succumbed to chronic weakness in China's economic activity and a sustained lack of concerted easing, Bank of America strategists, including Ritesh Samadhiya, said in a note.

Price Action: BABA shares traded lower by 2.11% at $81.26 on the last check Thursday.