However, the market value was still 2,178.8 billion yuan down from that of May 29, a level where the Shanghai Composite Index was above 4,300 points. As many analysts believe there were bubbles at that level, the gap is not expected to close up very soon.

Recovery of the market has also resulted in an increase in the number of new stock accounts. The new A-share account opening on June 6 was 205,901, up from the lowest amount of 162,190 on Tuesday. Total account opening was 226,208 at the two stock exchanges, including 3,111 B-share accounts. New mutual fund accounts, however, dropped to 17,196, according to China Depository and Clearing Co Ltd.

By Wednesday, there had been 102,918,800 investment accounts in the two bourses, including 89,024,100 A-share, 2,188,900 B-share and 11,705,800 fund accounts.

China is preparing for a growth enterprise board, according to Wang Shouren, vice chairman and secretary-general of Shenzhen Venture Capital Association. Wang said that preparation of a China-featured growth enterprise market is making substantial progress and is soliciting views from the industry.

The growth enterprise board will not be transformed from the current small- and medium-sized enterprise board in the Shenzhen Stock Exchange by lowering the threshold. The board will be a completely new one with a long-term development prospect.

Wang suggested the a company to be listed on the board should have a share base of no less than 30 million yuan, realized profits in three consecutive years, and have accumulated sales revenue of no less than 100 million yuan for the past three years, sales of no less than 50 million yuan in the previous year, accumulated profits of no less than 10 million yuan for the last three years and profit of no less than 5 million yuan for the last one year.

On the other hand, improved legislation and enhanced supervision are needed to combat illegal trading activities in the existing markets, said analysts. In the nine trading days from May 24 to June 5, there were 13 senior mangers, including directors, supervisor and mangers of 11 companies reported to have impropriated company funds for stock investment.

"The current law only stipulates that the nation confiscate all the surplus or 'extra earnings' from the illegal equity investment by management, using company capital," said a senior manger of a public company. Such a punishment is not severe enough to deter the crimes. The disproportionate cost-benefit ratio in effect "encourages" people with access to public funds to have a shot. "As a result, what we hear might be a tip of the iceberg. There might be an enormous number of such incidents unknown yet," said the manager.

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