Chinese markets take another tumble amid a brutal October for mainland stocks

  • The mainland Chinese markets tumbled more than 2 percent on Monday, amid an already rough October.
  • Some market observers, however, say a recover could be on the horizon.
An investor watches the electronic board at a stock exchange hall in Hangzhou, China.
VCG | Getty Images
An investor watches the electronic board at a stock exchange hall in Hangzhou, China.

Mainland Chinese markets suffered yet another setback on Monday, falling by more than 2 percent amid an already rough October.

On Monday, the Shanghai composite slipped 2.18 percent to close at around 2,542.10 while the Shenzhen composite fell 2.02 percent to 1,264.58.

Since the close of September, the Shanghai index has fallen by almost 9.9 percent, while Shenzhen has dropped more than 12.2 percent.

The recent moves downward came despite multiple efforts by Chinese authorities in recent days to calm the markets.

Some investors, however, say the market could be due for a recovery.

"In the past two weeks, we've been seeing that they have been saying things that support the (mainland stock) market and also a little bit on the economy," Kevin Leung, executive director of investment strategy at Haitong International Securities, told CNBC's "Squawk Box" on Monday.

Leung also said he saw a possibility of a rebound for the Chinese markets in the fourth quarter of 2018.

Describing the mainland stocks as "a little bit oversold," Leung said, "If you're looking at the Chinese numbers, they're not great, but ... they're not too bad."

"I'm not too pessimistic on that," he added.

Echoing Leung's sentiment, Tuan Huynh, chief investment officer for Asia-Pacific at Deutsche Bank Wealth Management, told CNBC's "Street Signs" that the outlook on China has "already turned more positive."

"We might have seen most of the correction," Huynh said, but added that "it's always tough to call out the bottom."

"We think it's very close to it and I think the measures the government has been putting in place, especially last week, I think that's a clear sign of the Chinese government that they do ... whatever it takes to at least short-term support the economy," he added.

China's yuan approaches important line

In recent weeks, the exchange rate of the Chinese currency has also approached a closely watched level of 7 yuan per dollar.

In the afternoon of Asian trade, the onshore Chinese yuan was at 6.9574 against the greenback after the People's Bank of China (PBOC) set the daily midpoint for the currency at 6.9377.

"I would expect if it does weaken to 7, there or thereabouts, it would take a period of time, because the PBOC does not want to alarm anyone, they want to do everything ... gradually. Which has the modus operandi for the trade war," Andrew Collier, a managing director at Orient Capital Research, told CNBC.