CHINA’S stocks ended a choppy day little changed Friday after suffering their biggest selloff in months the previous session, reflecting a clash between bulls and bears over the implications of fresh government steps to reduce financial risks.

While some investors used the government’s latest crackdowns on shadow banking and micro-lending as an excuse to take profits after a solid rally this year, others were out bargain hunting, betting the regulatory measures will reduce systemic risks.

Afternoon buying put a floor under the blue chip CSI300 Index, which ended the day up 0.04 percent at 4,104.20 points.

It had tumbled nearly 3 percent Thursday, its worst one-day loss in nearly 18 months, and was down earlier Friday.

The broader Shanghai Composite Index rose 0.06 percent to 3,353.82, after skidding 2.3 percent the previous day in its worst performance since December.

Financials led the gains, highlighting optimism in some quarters that tough steps to reduce risk and leverage will ultimately be a good thing for banks.

Brokerage CLSA reiterated its “BUY” rating on China’s four big banks, saying in a note to clients Friday that lenders such as ICBC will benefit from a more positive economic outlook, rising net interest margins, and falling bad loan ratios.

That view was echoed by China International Capital Corp. (CICC), which said China’s banking industry should be revalued upward, as tough rules against shadow banking would dispel worries over lenders’ asset quality.

But others felt Chinese stocks’ strong run wouldn’t last much longer.

“We have seen a bull run in blue chips this year. But no matter how good a company is, its price cannot go up forever,” said Wu Kan, head of equity trading at Shanshan Finance.

“Fund managers who have embraced those high-flying stocks are under pressure to lock in profit” as year-end approaches, he said.

Influential hedge fund manger Shanghai Chongyang Investment Management Co. said in a note: “There had been too much consensus among short-term investors toward blue chips, and trading had been excessively concentrated ... which would easily lead to high volatility. If the market can cool down at this level...that would be good for healthy development of the market.”

For the week, the CSI300 was down 0.4 percent and the Shanghai Composite Index was down 0.9 percent. (SD-Agencies)