Time to buy China stocks, say market analysts

Yellen, who took the helm of the US Federal Reserve earlier this month, made it clear the central bank is on track to keep trimming its stimulus in her first public hearing in front of US lawmakers on Tuesday. She told Congress she expects "a great deal of continuity" in the Fed's monetary policy. Last December, the Fed started to reduce bond-purchasing activities.

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In addition, Zhu also pointed out that "one of the key things to focus on as a multiyear investment theme" is the ongoing structural reform in China's finance industry. "Thanks to the new leadership and grand plan underscored by the Third Plenary Session, we feel a brighter prospect in the medium to long term. That opens the door to a re-rating potential over time," she said.

Sharing the optimism is Leung Chun-fai, head of investment strategy of HK and Greater China at Standard Chartered Bank (HK) Ltd. "Mainland companies are worth paying attention to in 2014 because the performance of A-shares has lagged behind most of the markets outside China for two years. As reform policies launched last year haven't been priced in, we expect a rosier year. There should at least be a gentle pickup. Good news is expected in March, which is when annual reports are published," Leung said.

However, Zhu from Goldman Sachs cautioned at the same time that it's not yet time to lean back. "We are not yet at the beginning of a multiyear bull market in China. The structural reform will be a gradual and bumpy one. Moves to fix overcapacity, local government investment vehicles and systemic risks in shadow banking will have negative effects in the near term. Volatility in the market will continue," she said.