China's A-share market reopens on Monday, its first trading day of the Year of the Rat, losing heavily across the board. Photo: cnsphotos

Chinese stock markets in two days managed to recover about half of the valuations lost in a virus-triggered sell-off on Monday, reassuring investors and industry workers that the Chinese stocks won't sink into a continuous slump in the short term. 

Nonetheless, mainland stock markets have another storm to pass, experts cautioned, as panic could rekindle and spread to the financial markets when listed companies report sagging first-quarter business performances. 

The benchmark Shanghai Composite Index closed at 2,818.09 points on Wednesday, up 1.25 percent. The Shenzhen Component Index edged up by 2.14 percent to close at 10,305.50 points, while the ChiNext Index stood at 1,939.62 points, up 3.02 percent. 

More than 180 stocks rose to the daily trading limit of 10 percent. Facemask and telecommuting shares led the rally.  

It was day two following China's sharpest stock market plunge since 2015. On Monday, the first trading day after the extended Spring Festival holidays, Chinese stock markets were a sea of red with around 3,000 stocks hitting the downward limit as investors sold off stocks amid worries over the coronavirus outbreak. 

But the A-share markets recovered quickly. On Tuesday, the ChiNext board climbed nearly 5 percent, while the Shenzhen market surged by 3.17 percent. 

Kang Chongli, director of the strategic department of Lianxun Securities, said that the markets are generally clear of panic after the frantic selloff on the domestic stock markets. 

"The top-down policy support has been a bonus for the stock markets, and I presume they will remain stable in the short term," Kang told the Global Times on Wednesday. 

An array of domestic securities firms have announced they will purchase more of their own equity products. The central bank also injected 1.7 trillion yuan ($243 billion) into the markets on Monday and Tuesday, which helped restore market confidence during a critical period. 

Kang predicted that the rally will be more "solid" after the peak of the student return trips and the Lantern Festival, which falls on Saturday. 

But experts warned that the Chinese stock markets risk further correction in the future over worries about how the economy will respond to the unexpected epidemic. 

"The panic has not totally abated, but it has passed its first phase. The markets are increasingly sensitive to the impact of the disease on economic sectors including manufacturing and trade," Xu Yang, managing director of the Shanghai Macro Information Consulting Co, told the Global Times. 

"If future economic data proves such a decline, the panic may return with a longer duration and greater strength."