Wednesday's slump to a four-year low has left analysts, fund managers and investors wondering whether the stock market has bottomed out.

Weeks ago when the benchmark index was still floating above the 2000-point level, some institutional investors were building up their China portfolio. They pumped $4 billion into the Chinese stock market over the 10 weeks to mid-November, according to fund flow and asset allocation data provider EPFR Global.

Confidence had been boosted by the recovery of the Chinese economy, after data indicating an increase in exports and the rising purchasing managers' index, or PMI.

But now many investors are nervous, and they may have good reason to be worried.

The Shanghai Composite Index fell another 0.89 percent, or 17.64 points, to 1973.52 on Wednesday, following its 1.3 percent plunge the previous day.

"There may still be downward pressure in the short term. The bottom of the Shanghai Composite Index should be at around 1850-1880 points," said Philip Securities' director Louis Wong Wai-kit.

"The A-share market is widely expected to still come under additional pressure in the coming weeks from the unlocking of a total of 190 billion yuan ($30.27 billion) worth of shares," Wong said.

The current average price-earnings ratio of A-shares is only 12.08, compared with 14.13 in 2008 and 18.20 in 2005.

However, some said that they expect the market to start stabilizing next week.

"The Chinese market has bottomed out and found its new level, so people don't want to be negative about China anymore," Stuart Rae, chief investment officer of Pacific Basin Value Equities at AllianceBernstein, told Reuters.

But not everyone agrees. Many domestic investors said that they're still dazed by the market's performance in the last two days.

Wu Haixin, 29 and an advertising specialist, also started to invest in stocks around 2007. So far, all of his investment of about 200,000 yuan is trapped in the market. He believes that the market won't see any increases this year.

A large number of heavyweight stocks are undervalued, said Zhang Qi, senior analyst with Haitong Securities Co Ltd.

A strong desire to short sell stock futures may also have resulted in the recent slump, he said, suggesting that it may be a good time for a reform in the new-stocks issuing system.

Zhu Lingqing in Shanghai contributed to the story.

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