China's 762 funds operated by 61 fund management companies racked up combined losses of 89.4 billion yuan ($13.9 billion) in the second quarter of 2011, compared with 36 billion yuan ($5.6 billion) in the January-to-March period, say data from the Beijing-based Tianxiang Investment Consulting Co. Ltd.

The biggest losers were the 377 stock funds that suffered a combined loss of 61.2 billion yuan ($9.5 billion) in the second quarter, as the stock markets continue with a bearish run amid investor worries that more monetary tightening measures are in the pipeline. The Shanghai Composite Index tumbled 5.67 percent from April to June, after rising 4.27 percent in the first quarter.

Worse still, all 61 fund management companies were swimming in red ink in the first half of this year, said Tianxiang Investment.

"The biggest concern is inflation that may prompt policymakers to further soak up market liquidity," said Zhang Zhuo, a fund manager of Penghua Fund Management Co. Ltd. "Corporate earnings may also be negatively impacted by lackluster real estate and auto markets."

But Lorraine Tan, director of equity research for Asia at Standard & Poor's in Singapore, disagreed. She expects China's stock markets to grow 15 percent by year's end.

Policymakers may turn to a relatively loose monetary stance as consumer prices stabilize, providing a powerful boost to the stock markets, she said.

Moreover, stock valuations are becoming more attractive after several months of declines, she said.