The 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.