China's stock market is at a turning point after the completion of share reforms but its foundations are "not sound yet," state press has reported, citing a chief regulator.

"Recent positive changes in the market are only initial and temporary, and long-standing internal and external factors hindering the healthy development of the market have not changed fundamentally," said Shang Fulin, chairman of the China Securities Regulatory Commission.

"The foundation of a stable stock market for the long term is not yet sound," Shang said in comments speech published Monday in the Shanghai Securities News.

Shang said regulators will more strictly enforce new accounting rules covering listed firms and securities brokerages, and crack down on falsification of profits, a problem that China has long struggled with.

Oversight authorities will also introduce stock index futures, a financial instrument that improves investors' ability to hedge risk, when "preparations are sufficient and conditions mature," he said.

In April 2005, China began to force its listed companies, almost of which were still state-owned, to convert their non-tradable shares held by various government departments into tradable stock.

The process involved the offer of cash, warrants and bonus shares to holders of tradable shares as compensation for the dilutive effect of the floating of the formerly non-tradable shares.

With the removal of non-tradable shares as a concern, and after a series of other market-supportive measures, the benchmark Shanghai Composite Index rose about 130 percent in 2006 and has continued to post gains since January.