Chinese markets haven't yet hit their real bottom, China investment expert says

  • The "real fundamental bottom" for the Chinese markets will likely come in October or November, said Alexious Lee, head of China Capital Access at CLSA.
  • Investors will do well to position themselves as the bottom hits, Lee said on the sidelines of the CLSA Investors' Forum in Hong Kong.
HANGZHOU, CHINA - AUGUST 07: An investor watches the electronic board at a stock exchange hall on August 7, 2018 in Hangzhou, Zhejiang Province of China. Chinese shares rebounded on Tuesday, with the benchmark Shanghai Composite Index rose 74.21 points, or 2.74 percent, to close at 2,779.37. The Shenzhen Component Index rose 251.19 points, or 2.98 percent, to 8,674.03.
VCG | Visual China Group | Getty Images
HANGZHOU, CHINA - AUGUST 07: An investor watches the electronic board at a stock exchange hall on August 7, 2018 in Hangzhou, Zhejiang Province of China. Chinese shares rebounded on Tuesday, with the benchmark Shanghai Composite Index rose 74.21 points, or 2.74 percent, to close at 2,779.37. The Shenzhen Component Index rose 251.19 points, or 2.98 percent, to 8,674.03.

China's stock markets have slumped in recent months, but investors have not yet witnessed the "real fundamental bottom," a China investment expert told CNBC on Monday.

The Shanghai Composite has fallen more than 18 percent since the beginning of this year, with losses accelerating in the second half of the year, when China's the trade war with America started.

Liquidity hit bottom in July and August and there may be more pain to come, said Alexious Lee, head of China Capital Access at CLSA. Intervention such as policy loosening can be expected from Beijing, he added.

Analysts have said this could spur Beijing to introduce more meaningful easing measures such as tax cuts and boosts to credit and liquidity in China's financial system.

"But we think that the real fundamental bottom will be probably be in October, November," Lee told CNBC on the sidelines of the CLSA Investors' Forum in Hong Kong.

Investors will do well to position themselves as the bottom hits, he added.

Sectors to look out for include "top notch industrial companies in very niche technologies" that will benefit from the Made in China 2025 initiative, firms involved in Beijing's environmentally-friendly efforts and those that will benefit from the Chinese consumption story.

"The Chinese have become more affluent and the need for upgrade of products, services is definitely evolving or changing the way the market consumes," said Lee, without naming any companies.