China's margin lending crackdown may have spurred a sharp knee-jerk selloff, but analysts aren't convinced it's anything more than a minor hiccup in the mainland's bull market.
"This is not a day to be a bull on the equity market," Tim Condon, head of research for Asia at ING Financial, told CNBC. "But I think this will be a transitory blip and monetary accommodation will return as a driver and share prices will continue to move higher over the course of the year."
Admittedly, it's quite a large blip: the Shanghai Composite dropped as much as 8.3 percent in intraday trade Monday before finished down 7.7 percent after rallying more than 50 percent last year as retail investors piled in, accounting for around 80 percent of trading volume.
Hong Kong's Hang Seng China Enterprises Index closed down 5.0 percent after falling as much as 6.6 percent in intraday trade Monday.
Brokerage and other financial shares took it on the chin after regulators announced measures to crack down on margin trading late on Friday.
The China Securities Regulatory Commission (CSRC) last week barred Citic Securities, Haitong Securities and Guotai Junan Securities from opening new margin trading accounts for three months after regulators determined the three failed to correct violations of rules prohibiting rolling over margin trading contracts. Another nine brokerages received warnings. In intraday trade Monday, Citic Securities dropped more than 16 percent in Hong Kong and by the 10 percent daily limit in Shanghai.