Correction pressure on small stocks looks likely

Market ponders possible tightening of monetary policy and sustainability of economic rebound

Investors may have to bear with short-term pains of greater volatility in the Chinese stock market as the securities regulator stepped up the effort to rein in the speculative bubble, analysts said.

"Capital has been concentrated too much in the stocks of smaller companies, startups and shell companies. The latest regulatory shift could mean that they may face greater correction pressure," said Shen Zhengyang, an analyst at Northeast Securities Co Ltd.