Int'l investors rush to ride China rebound (4)

Further, China's industrials were owed more than 8 trillion yuan in net receivables at the end of September, up 16.5 percent from a year earlier, according to the National Bureau of Statistics.

HSBC says the annual pace of profit growth of non-financial companies in the CSI 300, which tracks the performance of China's A-share market, has been falling for the last three quarters, while the quality of earnings -- measured as the ratio of free cash flow to net profit -- is in negative territory.

The CSI300 is down 7 percent this year, following a 25 percent drop in 2011 and a 12.5 percent fall in 2010.

"Five years back in 2007 the (Chinese) market was one of the most expensive and now it's cheap on a par with Korea -- it's one of the cheapest markets in Asia," said Pacific Basin's Rae.

"There is lots of stuff that's cheap -- some has recovery potential but then some is cheap for a reason."

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