Investors watch stock market data at a security exchange office in Chengdu, Southwest China's Sichuan Province. Photo: VCG

China's stock market dipped on Tuesday morning, with the Shanghai stock composite index falling below the key 3,000-point benchmark briefly. The index dropped 0.69 percent at the close of the morning session.

Observers said that as market liquidity faces a draining at the end of the year, it is normal for the stock market to experience short-term fluctuations and hover around the psychological level of 3,000 point. 

But given China's still solid economic fundamentals, multiple stimulus support and a likely easing in global interest rate environment, it is expected that the stock market will bounce back next year, they noted. 

The Shanghai index closed at 3,002.09 at the close of the morning session. The Shenzhen component index plunged 0.94 percent, and the ChiNext Index, tracking Chinese tech enterprises, lost 0.98 percent, while the Beijing Stock Exchange (BSE) 50 Index surged by 5.89 percent. 

Over 4,000 Chinese stocks dropped, with shares related to Huawei Ascend computing, lithography machinery, memory chips, smart phones and gaming the biggest losers in stock prices. Leading the gain are stocks related to food processing, chicken breeding and foreign trade.      

Turnovers at the Shanghai and Shenzhen bourses stood at 498.3 billion yuan, down 55.1 billion yuan from Monday's morning session.  

Yi Huiman, chairman of the China Securities Regulatory Commission (CSRC), said in an interview with the Xinhua News Agency on Monday that the regulator will safeguard the stable operation of the financial market, enhance monitoring of the trading of stocks and capital flows, and build up a risk assessment and early warning system.

Chinese analysts believe the remarks by Yi may work to clarity the regulator's stance on the capital market and bolster investors' confidence.

"The recent downward trend in China's stock market indicates that the market is in the process of digesting risks, and the transaction data signals that market pessimism will likely come to an end soon, indicating that 3,000-point Shanghai index could be a 'market bottom,'" Yang Delong, chief economist at Shenzhen-based First Seafront Fund Management Co, told the Global Times on Tuesday. 

The Shanghai index slumped below 3,000-point on October 20.

Yang expected that as a series of government policies rolled out to address economic challenges and China's economy may improve next year, the capital market could see a "higher-than-expected" rebound in 2024, especially those high-quality equities. 

Market observers also say that more long-term capital would likely flow back into China's stock market during the coming days, seeking a "bargain hunt" given relatively low market valuations. 

There are also rising positive factors on the global horizon that could drive a rebound of the A-share market. For example, the US Federal Reserve could turn from interest rate hikes to cuts next year, said Li Daxiao, chief economist at Shenzhen-based Yingda Securities.

Also, it is likely that Chinese yuan will continue to appreciate next year as the US dollar index drops, Li said. He describes that next year could see an "ice-melting" journey of Chinese high-quality equities.