Link between Chinese economy, bourses is ‘weak’: analyst

Shares on Chinese mainland stock markets bounced back on Thursday after a series of government measures were implemented to prop them up.

The rebound helped restore public confidence in the government's ability to tame the stock markets and stabilize China's economic growth, analysts said.

The Shanghai Composite Index rose 5.76 percent or 202.14 points to close at 3,709.33 points, while the Shenzhen Component Index climbed 4.25 percent or 469.45 points to close at 11,510.34 points on Thursday.

ChiNext, the country's NASDAQ-style board for high-tech and startups, also rebounded 3.03 percent or 71.71 points to close at 2,435.76 points on Thursday.

The rebound came as China's Ministry of Public Securitysent a team to the China Securities Regulatory Commission on Thursday morning.

As of Thursday night, police and the securities regulators have begun investigating more than 10 people and organizations under suspicion of "malicious" short-selling activities, the China Securities Journal said on its website.

A series of unprecedented emergency rescue measures have been implemented since last week, such as the suspension of IPOs, allowing 21 Chinese brokerages to invest 120 billion yuan ($19.3 billion) in blue-chip exchange-traded funds, and a promise from Central Huijin, a unit of China's sovereign wealth fund, to buy shares of blue chip stocks.

A third of the companies listed in the Shanghai and Shenzhen bourses also halted trading on Tuesday amid the continuous drop in share prices.

David Li Daokui, an economics professor at Tsinghua University, said that although the government's measures cannot be considered completely successful as of now, it shows the government's determination to stabilize the domestic stock markets.

"I have confidence that the government has the capability to eventually keep stock fluctuations under control," Li said.

Qian Qimin, an analyst at Shanghai-based Shenwan Hongyuan Securities, said that the stock market has its own rules and would automatically bounce back after dramatic falls, "like a pendulum swinging back and forth."