If the market continues to fall, equity pledging-related selling pressure could increase significantly, putting further pressure on the stock market," said Gao Ting, the Head of China Strategy with UBS Securities.Trading volumes have thinned, making prices more volatile, as many investors have given up on Chinese stocks since last summer, when shares crashed 40 percent.
Beijing intervened to stem that rout and orchestrate a recovery of sorts, but anyone who mistook that for a bottom and bought back in is nursing losses again.
There was a glimmer of light in that buyers in Hong Kong ploughed 4.5 billion yuan into the Shanghai bourse through the Stock Connect mechanism during the day, the largest inflow since September.