China’s see-saw ride? Don’t sweat it

Is this the end of China's rally? Not yet: Pro

China shares plunged, briefly touching correction territory in volatile trade, but analysts aren't paying it much attention.

"(I) don't think this is the beginning of the end. It's a correction which has been overdue for a long time," Xavier Denis, global strategist at SG Securities, told CNBC. "China is in good shape."

The mainland's markets have tested traders' nerves this week. After plunging 6.5 percent Thursday, the 's early session Friday took a roller coaster ride, trading down as much as 4.1 percent and pushing the index officially into correction territory before recovering to trade up 0.4 percent after the midday break.

Read More Why US can rally while Shanghai stocks get smoked

A slew of factors shared the blame for the volatility, including brokerages pulling back on margin lending, profit-taking after sharp gains this year, traders pulling out funds to participate in upcoming initial public offerings (IPO), large follow-on share sales and China's central bank withdrawing liquidity from the financial stability.

But analysts who have been positive on the market are shrugging off the selloff.

"A-shares have tended to be highly volatile," Kevin Ferriter, an analyst at Capital Economics, said in a note Friday.

"We expect this to be the case in the future."

Investors talk in front of an electronic board showing stock informations at a brokerage house in Kaifeng, Henan Province.
China Daily | Reuters

He isn't alone in seeing China market history repeating itself.

"Looking at the recent history of Chinese equities, a sizable single-day market sell-off generally would not de-rail the existing trend," Yuliang Chang, an analyst at Deutsche Bank, said in a note Friday. He noted that after similar sharp, quick selloff in 2007, the market consolidated and resumed its uptrend.

Read More China stocks crash, now what? Buy

"If history repeats itself, we could see the market rise again later after some near-term consolidation," Chang said.

Others also see the selloff as just taking some air out of the market after the Shanghai Composite rose more than 53 percent this year, with further gains likely ahead.

"The Chinese market has been exuberant to a frightening degree and one of the concerns about that is, it is entirely based on monetary stimulus and not underlying economic fundamentals," Michael Jones, chief investment officer & chairman of Riverfront Investment Group, told CNBC.

"But the Chinese market has been left out of the rally for the last several years. It was extremely undervalued before it went on this rocket ride so it's not quite as tippy-toppy as what you'd think given the recent rise."

—By CNBC.Com's Leslie Shaffer; Follow her on Twitter