"Because of so much negativity about China (and) very low expectations about China, the surprise to the upside could really be there," Menon noted.
Mobius also sees opportunity ahead. "The exciting thing about what's happening is you're going to see mergers (and) acquisitions; there'll be some bankruptcies and others will take market share," he said. "At the end of the day, it will be very good for investors like ourselves and the markets generally."
(Read more: Time to get picky on China stocks: HSBC)
There's another anticipated reform that has the potential to boost the mainland's markets, Mobius noted.
Currently, foreign investment into the A-share markets is strictly limited.
"More and more foreigners are going to be allowed in to the A-share market and these so called special economic zones -- starting in Shanghai but it's going to be spreading all over the coastal areas -- will include provisions for foreigners to invest in the A-share market. So that will be a push in a good direction," he said.
(Read more: China cash rates jump on liquidity worries)
Still, there is another headwind for the market. Fund managers appear to have already placed their bets into China. In December, more than 60 percent of emerging market fund managers were overweight on China's market, according to a Bank of America-Merrill Lynch survey.
It was the second-most popular emerging market bet, after Russia, the survey found.
—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1