Update | Investors still not convinced by Beijing’s bid to end US$2.8 trillion market rout
Rally fades as analysts worry further falls could set off a systemic crisis and push back reforms
Restoring battered investor confidence is the cornerstone of Beijing's sweeping response to a US$2.8 trillion domestic stock market rout that could yet set off a systemic crisis and derail reforms to transform the country's economic model.
The brevity of a relief rally at the start of trade and a mixed close shows investors are yet to be convinced by the slew of measures announced after a weekend meeting of the State Council, China's cabinet, chaired by Premier Li Keqiang .
"Senior policymakers realise that, because of the leverage in the system, stock market declines create a ripple effect that could damage the wider economy, so this is all about preventing a spreading panic that could trigger a systemic crisis," Lu Ting, head of research at Hong Kong-listed mainland brokerage HTSC, told the South China Morning Post.
"The issue now is about implementation and whether or not money starts coming back to the market."
In yet another reiteration of the government's confidence, the premier told a gathering of overseas Chinese in Beijing that economic development in the first half of the year was "within reasonable range".
"We are confident we have the capability to handle different kinds of risks and challenges to promote the sustainable and healthy development of the economy," he was quoted by state-run CCTV as saying.