The Shanghai stock market crash and the potential impact on China's consumers and other emerging markets should be front and center for investors, Allianz Global Investors CEO Elizabeth Corley said Thursday.
A rebound in China's stocks on Thursday following a more-than-30 percent correction is reassuring, she said, but the situation raises questions about China's transition from an economy driven by exports and investment to one fueled by the consumer.
"Is this going to have a knock-on effect onto consumer spending?" she asked during an interview on CNBC's "Squawk Box." "At the moment, it seems OK, but I think that's the thing we will be watching. We think, long term, China's a great buy, but right now, we think if anything the valuations are going to come off a little bit more."
Those valuations, driven by overleverage, had gotten "way out of control," Corley said.
China's banking regulator on Thursday announced new measures to stabilize capital markets. That followed action taken late Wednesday by Chinese authorities to prevent shareholders with a 5 percent or greater stake in publicly listed companies from selling those positions in the next six months.
Richard Kang, a member of the FTSE Group's Country Classification Indexing Committee, said he believed the regulations were meant to protect the typical Chinese investor, whom he characterized as a "bottom-up picker" similar to amateur U.S. retail investors during the dot-com bubble.
Like American day traders of that era, Chinese investors are learning for the first time what a bear market feels like and the consequences of buying on margin, Kang said, referring to the massive borrowing that has fueled stock purchases in China.
Recent steps taken by the Chinese government to allow more foreign investment in Chinese stocks will bring overseas investors into the market and more than offset the risk creating by domestic buying, he said.
Like it or not, pension, index and sovereign wealth funds are on course to increase allocation to Chinese markets, Kang said. He noted the FTSE included China in the world's largest emerging market index, and said the MSCI, S&P 500 and Dow Jones industrial average will follow suit.
While things look bad now, Kang said he is bullish long-term and the crash represents a buying opportunity.
"If I were to open up the magazine—whatever is the Time magazine of China right now—it wouldn't surprise me if it says 'end of the stock market,' which sounds like 1982 here in the U.S.," he told "Squawk Box." "Major bull market signal for me."
Whether investors can stomach the tough times largely depends on their investment time horizon, he said.
"If you are in, well, you have to figure out, do you want to commit for the longer term, or if you can't handle it, by all means, chop off the arm to save the body," he said.