If there's one mystery about China's volatile stock market, it's the legendary and miraculously resilient 2000 points of the benchmark Shanghai Composite Index.
Trading on Wednesday was no exception, with the index dipping below the 2000 level in the morning, before reclaiming the lost ground after the lunch break.
Time and time again, since the index climbed above that level 14 years ago, the index has rarely stayed under 2000 for long, despite the poor performance of China's stocks since the global financial crisis in 2008.
It is widely viewed as the limit of Beijing's tolerance of how far a bearish mood can extend in a market dominated by retail investors, and out of fear of any political and social instability that any prolonged selloff could trigger.
Whenever there are signs that the market threatens to break or stay under that crucial level for long, there is action by authorities or mysterious trading activity that keeps the index buoyant.
On many occasions the government has swiftly rolled out market supportive measures ranging from a mini economic stimulus to easing financing curbs on property developers. On other occasions, state-controlled media has delivered messages that talk up the future of both the economy and equities investment.
On Wednesday, the index sank as low as 1991.06 due to persistent worries about a slowing Chinese economy, a theme that's pushed the index down 4.3% this year. But the market later in the trading day rallied after China's economic planning agency released details of a plan to let private capital take part in major infrastructure projects to help boost growth.
'At the moment, the 2000 level does appear to be a 'policy bottom' for the market. Since the market fell below that level in late March, the authorities have unveiled a series of policy measures aimed at boosting sentiment,' said Huang Cendong, an analyst at Sinolink Securities.
Back on March 20, the index fell to 1993.48 but the very next day, the market staged a strong comeback as news circulated that the securities regulator would launch a long-awaited pilot project to let major blue chips issue preferred shares, a fresh fundraising channel for cash-hungry companies like banks.
In a similar incident on May 9, the Shanghai index fell to an intraday low of 2001.30. After the market's close, the State Council, China's cabinet, unveiled plans to reform the country's financial markets, including overhauling the nation's much-criticized system of initial public offerings, spurring the market up 2.1% the next day.
On other occasions, no policy measures were taken but the market enjoyed sharp turnarounds within the last few hours of trading that helped put the battered index back above the 2000 level. Traders have attributed such dramatic moves to suspected buying from powerful investors such as state pension funds and asset managers with close ties to the government.
In some way, the 2000 level of the Shanghai index carries the same kind of symbolic significance attached to the minimum economic growth rates, ranging from 7.2% to 7.5%, for a government that needs to rely on a booming economy and stock market to maintain job creation and social stability.
'However, it's impossible to protect the 'policy bottom' all the time. There will always be a 'market bottom' below that. In that respect, only when economic fundamentals show signs of improvement can the stock market really turn around,' said Mr. Huang.