Asian shares largely staged a turnaround late Thursday, as Chinese markets regained their footing on the back of fresh regulatory support.
The country's banking regulator said Thursday it will use a series of measures to support the stability of the capital markets, such as encourage interbank lending between the country's margin lender and banks, while permitting financial institutions to renegotiate maturity terms.
Authorities also took the drastic step of ordering shareholders with stakes of more than 5 percent from selling shares for the next six months late Wednesday. In addition, Beijing eased rules for insurers to invest in blue-chips stocks, raised margin requirements for short positions against small-cap stocks and warned against "irrational selling", among other initiatives.
According to Francis Cheung, head of China & HK Strategy at CLSA, the unprecedented emergency measures may be working.
"This may be the beginning of the end of China's correction, with the government buying the market and will likely continue buying until the markets stabilized. Of course, [a reverse in sentiment] is not going to happen overnight. With the market still relatively expensive and people wanting to sell still, downside remains in the A-share market at this level," Cheung told CNBC on Thursday.
Analysts at Deutsche Bank also expect mainland shares to see a technical rebound this week, with a "policy put" in play and commitment from the central government "which implies even stronger policy support if what has been announced proves insufficient," analysts wrote in a note.
However, with more than half of the listed companies in China's market suspended from trading, investors whose cash are locked up in these suspended stocks remain spooked.
"[Beijing is] trying to backstop this, but one of the problem is having 13,000 companies suspended from trading and that makes life difficult for sellers and this had led to the spillover in the region," Herald Van Der Linde, HSBC's APAC head of equity strategy, told CNBC Asia's "Squawk Box." "In the near term, sentiment doesn't look very good."
Overnight, major U.S. indexes ended nearly 2 percent lower as the New York Stock Exchange suffered a nearly four hour outage.