Chinese shares rebounded from an early plunge on Tuesday to end 0.8 percent higher, suggesting the market might be regaining strength after a two-day slide caused by worries over new share supplies and government policy.
The Shanghai Composite Index closed at 3,973.371 points, after tumbling over 3 percent to an intra-day low of 3,818.853. It had dropped 6.83 percent on Friday and Monday.
Gaining Shanghai stocks outnumbered losers by 565 to 284. But turnover in Shanghai A shares continued to slip, to 120.6 billion yuan ($15.8 billion) - the lowest since early April - from Monday's 139.2 billion yuan, showing many buyers were staying out of the market
Some analysts said the index's recovery from near 3,800 points, which had been viewed as support by many investors, indicated the market would stay strong in the near term.
"This week's market behaviour is very similiar to three weeks ago, when the index fell sharply Friday through Tuesday. I expect it to continue rebounding from today's low through the end of this week," said Zhang Qi, analyst at Haitong Securities.
As expected, fast-growing shipping giant China COSCO Holdings staged a spectacular debut in Shanghai, jumping 93 percent from its IPO price to close at 16.38 yuan. It hit a high of 17.15 yuan. However, many investors remain concerned about the market's ability to absorb a string of major IPOs and other cash calls in coming months.
Fuelling the worries about supply, Anhui Conch Cement Co announced a plan to sell up to 200 million new A shares - raising as much as 11 billion yuan based on Monday's share price - to obtain funds for expansion. The stock fell 1.64 percent to 53.90 yuan.
Official data showed the number of new A-share investment accounts opened on Friday fell to 149,920, a two-month low. Although daily account openings remain well above last year's levels, they have been dropping for five straight days, suggesting flows of new money into stocks may slow.
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