The Asset Management Association of China (Amac) has made a rallying call for domestic fund managers to continue to support mainland stocks, despite evidence of a bear market in June.

The association, which represents 95 mainland asset management firms, including all of the big names, calls for fund managers to take advantage of the buying opportunity that the equity market correction is now providing, in an official statement.

Meanwhile the People's Bank of China (PBOC) has intervened to cut interest rates in a bid to bolster investor support. But foreign analysts are suggesting a further stock rally at this point would be unsustainable.

The PBOC announcement coincided with various initiatives from the government to boost the market. Most notably, there has been speculation in Chinese media that Central Huijin, the domestic sovereign investor, pumped Rmb10 billion into the market by buying four ETFs investing in blue-chip stocks on Monday this week.

This speculation was supported by a statement from the Ministry of Finance on its website, that the government is to allow national pension funds to allocate 30% of their assets to stocks, equity funds and mixed asset funds.

Mainland commentators estimate such a policy, if implemented, could release as much as Rmb1trillion into these asset classes.

The message from Amac for fund managers was to keep faith in the stock market and recognise that the core foundations for the stock rally have not changed. These include a stable currency policy, dividends from economic reforms, as well as reallocation of assets amongst the general public.

“Currently, our country’s economic development is stabilising, with a healthy long term growth trend present." said the association in a Chinese statement.

"Stock prices, which are bottoming out, will provide mature, rational, bearish investors a rare investment opportunity,” the statement added.

Investors in China A-shares have seen wild swings of late, but on a one-year view the Shanghai composite index is up almost exactly 100%. Last month, however, the market entered a technical bear phase, dropping over 20% in the three weeks to the end of June.

On Monday, the PBOC cut interest rates by 25 basis points, to 4.85% and deposit rates to 2%, which analysts saw as a cynical attempt to alleviate the risk of a market sell-off. Bank of America Merrill Lynch stated that China’s bull market is unsustainable despite the rate cuts.

“Short term bounce aside, we doubt that the latest cuts will trigger any sustained rally," said the BAML report: "This is the 4th round of major PBOC actions to support the market since November 2014 and each subsequent round's impact has diminished."

“By now, very few investors harbour any doubt about the government's desire to see the market up. But recent inflows had proven insufficient to offset outflows and push the market higher,” it added.

The report suggested that the Chinese central bank is incentivised to see a strong A-share market to avoid capital outflows ahead of the International Monetary Fund’s November vote on whether to include the Renminbi in the special drawing rights program.