The paradox of China's stock market

Prospects

Guo Shuqing, chairman of the CSRC, said at a forum on Wednesday that he is "full of confidence" in the stock market. Facing pressures, the CSRC has taken steps to address investor concerns, including lowering trading fees, since last year.

Last week, the CSRC issued a new rule tightening restrictions on companies suspected of insider trading.

So far, Shanghai's stock market has failed to reflect government policies as it is dominated by smaller retail investors who tend to think more in the short term -- a stark contrast to markets elsewhere that depend on institutions such as pension funds that invest long term, analysts say.

Experts from SWS MU Fund Management Co Ltd believe that Chinese stock market investors are looking for policy signals ahead of the annual central economic work conference in December, a key annual meeting of China's senior leadership that will set the tone for the following year's economic policies and outlook.

This year's meeting is believed to be more important than those in past years because it follows China's once-a-decade leadership reshuffle.