Analysts divided on prospects of bull run
China's A-share market dived again on Thursday with the benchmark Shanghai Composite Index falling by 3.46 percent to 4,527.78 points, after a rise of 2.48 percent on Wednesday.
Over 100 stocks Thursday shed their value by the daily limit of 10 percent.
The Shenzhen Component Index also declined 3.8 percent to close at 15,692.44 points Thursday.
The ChiNext Index, which tracks China's NASDAQ-style board of growth enterprises, fell by 5.23 percent to end at 3,206.38 points on Thursday.
Nearly 2,000 companies on the two bourses saw their share prices drop on Thursday with sectors related to the "Internet Plus" initiative, healthcare, media and software, posting biggest drops.
The A-share market did not respond to the favorable policies announced by the State Council on Wednesday, which were expected to give a boost to the stock market.
An executive meeting of the State Council on Wednesday approved the guidelines for the "Internet Plus" initiative, which encourages off-line companies to embrace online opportunities, and announced measures to facilitate the initiative in 11 major sectors such as manufacturing and agriculture.
The meeting also decided to lower the premiums for work injury insurance to 0.75 percent from the current 1 percent and maternity insurance to below 0.5 percent from the current 1 percent.
The policies will take effect on October 1 and will reduce enterprises' costs by 27 billion yuan ($4.35 billion) every year, experts said.
Besides, the State Council also approved an amendment draft on Wednesday which removes a 75 percent loan-to-deposit ratio limit on Chinese commercial banks, expanding banks' lending ability and raising prospects of the performance of banking stocks.
"China's stock market is not in line with the performance of the real economy. I don' think the stock market will rise further and the bull run may end soon," said Will Tao, director of consultancy iResearch who specializes in macro-economy, adding that tight liquidity is the main reason behind the fluctuations in the stock market.
Besides, the China Securities Regulatory Commission, the securities watchdog, has recently imposed strict controls on the scale of margin trading and has recently limited the margin trading outside the brokerage system.
Though the stock market has seen major fluctuations during the past few trading days, some experts still believe the bull run will continue.
A research note from Guotai Securities said that the market is now experiencing "adjustments" and it is not that the market will become bearish in the near future.
As for the big decline in the ChiNext Index, analysts said it is more of a reasonable correction since it has risen so irrationally in the past months.
