China Securities Regulatory Commission (CSRC) is vowing to keep a close watch on the investment of public funds and handle any legal violations in a timely manner.
But meanwhile, the watchdog denies that some rumored investigations have already taken place.
CSRC spokesman Deng Ge.
"The CSRC has not conducted any investigation or window instruction as rumored. Managers of public funds should operate investment according to law and regulations. The CSRC will supervise such operation according to law, without interfering in public fund managers' normal business."
The rumors over the so-called investigation and instruction are believed to have triggered drops in the country's stock market over recent days.
Deng notes that anyone found involved in any irregularity, either on laws, regulations or contracts, will be punished.
Speculation over stricter supervision has risen as trading frenzy mounts in China's Enterprise Market.
At present, the NASDAQ-like market has an average price-earnings ratio of 114 times, with nearly 230 shares' prices doubling already this year.
Experts have warned of bubbles in the market.
