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Why China shares are still a buy…maybe

Is it time to buy Chinese stocks?

There's still a lot going for China's equity market, it's just a case of biding time – however long that may be – until battered stocks find a floor, analysts told CNBC on Tuesday.

"One of the bright spots is that we have come down so much, we're almost at the levels seen in February, March which seem sensible support levels," Richard Harris, CEO of Port Shelter Investment Management, said on "Squawk Box Europe."

Having soared some 125 percent between late October and June, China's benchmark Shanghai Composite has shed almost 30 percent of its value in a violent selloff that has forced Beijing to take stringent measures to stem the slide.

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Investors keen on picking up beaten-down Chinese stocks should wait for authorities to start rolling back supportive measures as that might indicate stabilization, analysts said.

"What we need to see is them gradually roll back the intervention they have put in place," said Will Ballard, head of emerging markets and Asia at Aviva Investors.

"When you go back into history and look at times when authorities have intervened in equities markets, Black Monday (on October 19, 1987) in the U.S. for instance, the U.S. market corrected about 25 percent, found a level and cleared pretty quickly," he added. "It takes longer for markets to find a clearing point, but they need to and this is what we're seeing in China right now."

China's central bank on Tuesday pumped 50 billion yuan ($8.05 billion) into the banking system to maintain liquidity, Reuters reported, citing traders. It would be the latest in a series of steps taken to support stocks that dived 8.5 percent on Monday.

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Harris at Port Shelter Investment said 3,300 was a strong support level for the Shanghai Composite, which closed down 1.7 percent at 3,663 points on Tuesday.

"It is an emotional market, one driven by greed and fear and right now fear is holding sway. But my guess is that these things won't go down forever," he said.

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According to other analysts, the slide in Chinese stocks reflected a removal of "frothiness" from lofty levels, and while the economy was slowing, it was unlikely to be impacted significantly by the selloff.

This has been one of the chief concerns for investors outside China – that a volatile stock market could trigger a protracted slowdown in the world's second largest economy that would in turn deal a blow to global growth.

"We were underweight (Chinese stocks) and bravely went to neutral, so we're not yet a buy," Peter Sullivan, head of equity strategy, EU and U.S. at HSBC, told CNBC.

"The real thing is does this (selloff) have a wider systemic impact and (one) thing that is positive is that equities only represent 15 percent of Chinese financial wealth."