Chinese shares continued to freefall on Tuesday after experiencing the biggest loss in a single day since 2007 on Monday. At the opening of the trading session on Tuesday, the Shanghai Composite Index and the Shenzhen Composite Index fell by 4.09 percent and 4.06 percent to 3,573.14 and 11,986.25 points respectively.

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Experts say investors were disappointed by the release of financial data which showed that profits from the country's industrial sector had dropped slightly year-over-year.

China's stock market is just recovering from a three-week-long plunge that led to a loss of about $3 trillion in market value. Regulators were able to successfully stem the tide with a series of market interventions, including capping the daily trading volume on the CSI 500 Futures Index, encouraging state-owned corporations to buy back shares and preventing major shareholders from selling for the next six months.

On Monday, with investor's sentiments down, the Shanghai Composite Index and the Shenzhen Composite Index dropped by 8.48 percent and 7.59 percent to 3,725.56 and 12,493.05 points respectively. The ChiNext Index, which dipped by 7.4 percent to 2,683.45 on Monday, fell further by 5.11 percent to 2,546.41 points at the opening of trading on Tuesday.

This is the biggest one-day loss that the market has experienced in nearly a decade and it has led to speculations. Critics say the effects of the much-needed intervention by the government may have fizzled out.

However, China Securities Finance Corporation (CSF) has announced that it will continue to stabilize the market by purchasing shares.

Zhang Xiaojun, China Securities Regulatory Commission (CSRC) spokesman said an investigation is ongoing into the practice of short-selling in the market. Chinese regulators have since expressed concerns that the recent market plunge was being caused by some investors who engaged in illegal short selling.  He revealed that CSRC has dispatched investigators to two companies to search for evidence of illegal practices. Earlier in the month, investigators announced that they had uncovered evidence proving that certain firms engaged in short-selling of their stocks and stock indexes.

TagsChina Stock Market News, China Stock Market Biggest One-Day Loss, China stock index, China Stock Manipulation, China Stock Bubble, China Stock Plunge