China's equity markets continued to recoup their losses on Monday, raising concerns that the national rescue funds may exit their positions now that the market has stabilized, once again putting pressure on stocks.
The China Securities Regulatory Commission moved swiftly to allay such concerns, referring to media reports of such predictions as "false".
"It is irresponsible to report that without verification," CSRC spokesman Zhang Xiaojun said.
Instead, Zhang added, stabilizing the market, restoring investor confidence and preventing systemic financial risks continue to be the top priorities for the regulator.
Zhu Guangyao, vice-minister of finance, said over the weekend that the government has achieved the goal of ending the panic selling.
Zhu said that the stabilization measures are appropriate and justified given the high level of market volatility. But he added that the market rout exposed a "supervision mismatch" and said that regulatory improvement is needed to weather future market turmoil.
Commercial banks in China have provided liquidity exceeding 1 trillion yuan ($160 billion) to the State-owned margin lender China Securities Finance Corp to bolster the capital positions of securities brokerages so that they can purchase stocks and mutual funds, according to media reports.
Two State-owned mutual funds have also reportedly raised a total of 80 billion yuan to invest in the stock market. The country's top 21 securities firms previously pledged to collectively invest 130 billion yuan to rescue the falling market.
"The goal of government intervention is not to influence market direction but to prevent systemic crises, since the stock market is highly intertwined with other financial markets," said Yang Chengzhang, chief economist at Shenwan Hongyuan Securities.
On Monday, the benchmark Shanghai Composite Index gained 0.88 percent to close at 3,992.11 points.
The index has rebounded by 14 percent from its recent bottom. The fall prompted the government to adopt a series of measures to prop up the market, including halting the offering of new shares and banning major shareholders of listed companies from selling shares for six months.
Some analysts said that the unprecedented government rescue efforts underlined Beijing's concerns that a weak stock market could exacerbate the country's capital outflow amid the market anticipation of the yuan's depreciation and an expected interest rate hike by the US Federal Reserve.
