By Wednesday, the price-to-earnings ratio for the benchmark Shanghai Composite Index dropped from 25 in mid-June to 15.6. The ratio for the smaller Shenzhen Component Index was down from 70.1 to 37.3, and from 134.5 to 63.6 for the ChiNext Index, China's NASDAQ-style board of growth enterprises, the CSRC said.
Risks associated with high-leverage stock financing have been released, as some illegal financing activities were cleared and stock financing from brokerages dropped to a normal level, the CSRC said.
On Wednesday, the CSRC fined three companies for illegal stock financing activities, including Shanghai-based Mecrt Corporation, Hangzhou-based Hundsun Technologies Inc. and Hithink Flush Information Network Co., Ltd.
Market liquidity is relatively abundant, as mutual funds, social security funds, insurers and other institutional investors have abundant capital at hand, the CSRC said.
FURTHER REFORMS EXPECTED
The regulator said it will continue deepening reforms, improving legal framework and enhancing market supervision in a bid to prevent further abnormal fluctuations.
The stock market rout since June exposed many problems, including insufficient regulation and supervision as well as excessive short-term speculations, the CSRC said, adding that it will study the introduction of a stock index circuit breaker system, a point at which trading will be suspended for a period of time in response to substantial drops.
China should make sure that the stock market serves the real economy, promotes the development of institutional investors and implements policies to encourage long-term investment, the CSRC said.
China should also learn from developed economies on how to improve the top-level design for the market, the CSRC said.
Efforts will also be made to strengthen the management of investment accounts and improve a risk pre-warning system and an inter-market real time monitoring system, it said.
"The CSRC will combine the goal of market stabilization with market repairing and construction, and strive to nurture a capital market featuring equitable, transparent, stable and healthy development," it said.
The CSRC also said to continue cracking down on violations in the stock market, such as illegally financing, spreading rumors or manipulating the market.
