In the past two weeks, the government stepped in quickly in an effort to stabilize the stock market when it tumbled. Policymakers are worried that the turbulence will affect the stability of the overall capital market and financial system, or it will spread to affect household wealth and consumption.

"Stocks represent less than 15 percent of household financial assets, and capital is also concentrated," said Jeremy Stevens, an economist with the Standard Bank.

"Nevertheless, the additional 52 million stock accounts opened so far this year mean the potential harm has widened."

"A large number of companies, facing weak demand, squeezed margins and falling profits, speculated in the stock market," he said

Stevens said that many of the government interventions to shore up the market in the short term may shift the risk from speculators to the core financial institutions.

"Worse still, in the longer term, these steps contradict plans to allow the market forces to determine the allocation of resources," he said.