As the People's Bank of China (PBoC) latest attempt to stem the violent downdraft in mainland equities proves futile, investors say authorities still have a few levers left to pull but no guarantee they will rescue the market from its swoon.
The country's stock market dropped into bear market territory on Monday, after its 3 percent-plus plunge left it more than 20 percent down from its June 12 peak. This most recent leg down comes after the central bank surprised the markets with aggressive monetary easing – cutting both interest rates and the reserve requirement ratio (RRR) for select banks over the weekend.
"There have been numerous rumors circulating of alternative steps policymakers could take to shore up the market," Mark Williams, chief Asia economist at Capital Economics, wrote in a note.
"These include authorizing the government pension funds to buy equities, or ordering [state-owned investment firm] Central Huijin or other government-owned entities to do the same. The prospect of a temporary halt to IPOs [initial public offerings] has been discussed," he said.
Indeed, there is also the prospect of further monetary stimulus, Williams said.
"There is plenty of room to cut benchmark interest rates further. But People's Bank officials may baulk at expending too much monetary policy ammunition in an effort to support markets, particularly if the spillover from a market slump to the economy outside the financial sector is limited."