Shanghai stocks lost another 1.7% Tuesday even as several of the region's bigger markets ended little changed.
The Shanghai Stock Exchange composite index closed at 3,663, bringing its decline for the week's first two sessions to 10%.
Elsewhere, benchmark indexes edged down 0.09% in Australia and 0.1% in Tokyo, while rising 0.01% in Seoul. Hong Kong's Hang Seng index, meanwhile, rose 0.62%, while Singapore's Straits Times index fell 0.98%.
On Monday, after weeks of gains facilitated by strong government support, the Shanghai composite index plunged 8.5%, amid talk the government had pulled back to test the market's resilience.
Against the backdrop of criticism that recent government moves to prop up the market could set back its goals of integrating China's capital markets with global markets, investment professionals speculate the government now is working to fine-tune its approach.
“You get the sense that the government has realized that some policies” weren't optimal, and that in the future intervention could become “more standardized,” in line with what regulators in other major markets do at times of extreme stress, said Catherine Yeung, Hong Kong-based investment director with Fidelity Worldwide Investment.
They'll “continue to support this market,” although they may change techniques — looking to ensure that selling pressure doesn't become panicky even if high valuations make further declines inevitable, said Lukas Daalder, Rotterdam-based chief investment officer with Robeco’s investment solutions team.
The fact that hundreds of companies in Shanghai and Shenzhen were allowed to suspend trading in their shares as the market plunged, with no clarity as to when they would resume trading, was distressing for many investors, noted Ms. Yeung. But it's a young market and “lessons will be learned,” she said.