Chinese shares sank further Tuesday, defying government efforts to arrest a precipitous fall that has wiped an estimated $3.2 trillion off markets and threatens the world's number two economy.
The government over the weekend announced a halt to initial public offerings (IPOs) and moves to pour funds into the market to end three weeks of plunging prices.
Analysts say the heavy-handed intervention throws into question the pace of China's economic reforms and the ability of the government to deflate what many describe as a stock market bubble.
At midday on Tuesday, the benchmark Shanghai Composite Index was down 3.18 percent, or 120.26 points, at 3,655.65.
The Shenzhen Composite Index, which tracks stocks on China's second exchange, slumped 5.59 percent, or 114.20 points, to 1,927.65.
"The slumping Chinese stock market has raised concerns of systemic risks," ANZ Banking Group said in a research note on Monday.
When the Communist Party launched a stock market -- the ultimate capitalist tool -- 25 years ago it kept strict control over key decisions, including which companies can list and who could invest.
Under the administration of President Xi Jinping, policymakers unleashed a liquidity surge and state media urged the market forward, seeking a boost for a slowing economy and populist cheer among investors for their growing fortunes.
Over 12 months Shanghai soared more than 150 percent.
But Communist planners are now facing the challenge of trying to prevent a market crash that could spark social unrest from disgruntled investors and infect the larger economy.
"China's leadership has doubled down on its efforts to prop up equity prices because it believes that its own credibility is now coupled to continued gains on the markets," Chief Asia Economist for Capital Economics, Mark Williams, said in a research report on Tuesday.
"It is following a risky path."
- Fears of fresh correction -
On Sunday, the government said the central bank would provide funds to the state-backed China Securities Finance Co. to help "protect the stability of the securities market".
The China Securities Regulatory Commission (CSRC) also said there would be a temporary halt to IPOs, which tend to drain funds from the rest of the market, hurting prices and sentiment.
A day before, China's 21 largest brokerages said they would invest at least 120 billion yuan ($19.3 billion) in so-called "blue chip" exchange traded funds (ETFs).
The latest moves followed an interest rate cut, relaxed rules on margin trading, and proposals to let the state social security funds invest in equities -- which failed to arrest a near 30 percent fall over the three weeks to Friday.
"It's coming to a point where you're covering one bad policy with another," Tai Hui, Hong Kong-based chief Asia market strategist at JPMorgan Asset Management, told Bloomberg News.
"A lot of investors are still concerned about another correction."
Chinese punters are overwhelmingly small, retail investors who have made bets using borrowed money through a practice called margin trading. Under it, they only need to deposit a small proportion of the value of their trades, potentially generating bigger profits but also exposing them to bigger losses.
At a securities trading centre in downtown Shanghai, one elderly investor expressed anger at the government for his losses.
"I have been in the market for more than 25 years and this is the worst fall in terms of the speed the market went down," said Gu Yongbiao, 60.
"The government only cares about the institutions and not the individual investors," he said.