Over 700 firms listed in Shanghai and Shenzhen - equivalent to around a quarter of the firms on the two exchanges - have issued requests to suspend trading or extend trading halts since a June 12 peak, according to an analysis of company filings.
China's stock market has crashed 30 percent since its mid-June highs, ending an eight-month-long bull run and leading to an unprecedented series of support measures from Beijing aimed at halting a slide that has raised fears about the stability of the world's second-biggest economy.
The number of firms that have requested trading halts or extensions since then is around double the number for all of April, the analysis shows, underlining a concern traders have that firms can too easily suspend their shares to avoid the worst impacts of a downturn.
"How is it possible that so many firms are calling for trading halts in such a short period of time?" said Guodu Securities analysts Xiao Shijun.
"At the moment regulators have only one eye open. In a crash, a firm can use any small matter to call for a halt."
The 702 firms, out of roughly 2,800 firms listed on the main Shanghai and Shenzhen bourses, said the trading halts were linked to restructuring, planned share placements or the pending release of a "significant matter".
A person with direct knowledge of listing procedures on the Shanghai exchange said there had been a large recent bump in numbers of applicants for trading halts and it was possible that firms were using these as a way to sit out the market slide.
"We cannot rule out that companies are halting trading to prevent further falls in their share prices," the person said, adding that firms would face fines if they were found to have requested trading halts without good reason.
She added that firms were generally able to halt trading for periods ranging from 10 working days to up to three months.
In an extraordinary weekend of policy moves, brokerages and fund managers vowed to buy massive amounts of stocks, helping keep the main indexes in the black on Monday despite huge volatility.
Others said the rise in trading halts could actually create more stability in the markets. "Trading halts could help prevent volatility in the index in the near term, so it could have a positive impact," said Cinda Securities analyst Liu Jingde.
(Reporting by Brenda Goh and Adam Jourdan, Additional Reporting by Engen Tham, Deena Yao in HONG KONG and SHANGHAI Newsroom; Editing by Pete Sweeney and Will Waterman)
By Brenda Goh and Adam Jourdan