• Investors appear divided on the outlook for Chinese stocks, despite recent positive signals from authorities in the country.
• China's markets bounced back strongly last week following the release of a Chinese state media report signaling support for Chinese stocks.
• Credit Suisse's Jack Siu said it's time for longer-term investors to dip their toes into Chinese stocks, while others such as IMA Asia's Richard Martin argue that the China markets are "driven by policy" rather than performance of firms.

There are signs regulatory scrutiny in China may start easing following months of clampdown on its tech giants — but investors remain divided on what it could mean for Chinese stocks.

Chinese stocks have bounced back following the release of a Chinese state media report last week signaling support for Chinese markets and calling for closure on a months-long tech crackdown by Beijing.

The rebound came after days of big losses as investor fretted over a myriad of concerns — from the economic impact of a Covid outbreak in China to comments by JPMorgan calling China's internet sector "uninvestable."

Still, the Shanghai composite in mainland China remains 10% lower year-to-date as of Wednesday's close, while the Shenzhen component has plunged more than 16% in the same period.

In Hong Kong, the Hang Seng index is still down more than 5% so far this year — even after last week's gains of more than 4%, and after rising more than 3% on Tuesday.

Time to start investing?

"Even after the rebound we still see valuation as attractive," Jack Siu, chief investment officer of Greater China at Credit Suisse, told CNBC's "Street Signs Asia" on Friday.

Prior to the recent bounce in China's markets, valuations had been at close to 10-year lows, Siu said.

"It's going to be volatile, but it's time to start dipping our toes in," he said

The stock markets have priced in sufficient risk premium on issues such as Covid in China and lingering concerns over the real estate market, he added.

Investable but be careful

Management consultant Richard Martin, on the other hand, warned that China is "investable but as a policy-controlled market."

Any market that falls around 30% in 10 days due to policy and geopolitical concerns — and then bounces back after the announcement of government support, is driven by policy and not the value or performance of its companies, said Martin, who is managing director at IMA Asia.

"You can invest. Just make sure you've understood the political/policy winds," Martin said.

'Tough road ahead'

Meanwhile, Michael Yoshikami from Destination Wealth Management said it will be a "tough road ahead" for Chinese firms as the regulatory environment remains uncertain.

"Just because they say they're going to have some sort of foundation built for Chinese stocks, I still think the Chinese government wants things stabilized," said Yoshikami, founder and CEO at the firm. "It's still going to be pretty active, and I think investors should be pretty cautious of the China sector right now."

Investors are now also watching for moves on the policy front in China as Beijing seeks to meet its gross domestic product growth target of about 5.5% for 2022.

On Monday. the central bank left the benchmark lending rate unchanged.

"We expect China's policymakers to be proactive in supporting growth from here. On the macro front, in the coming weeks we now expect both an interest rate cut and a reduction to the reserve requirement ratio (RRR) for banks, as well as a strong increase in fiscal spending support for the economy," Salman Ahmed, global head of macro and strategic asset allocation at Fidelity International, in a Tuesday note.

RRR refers to the amount of funds banks need to hold in reserve.

— CNBC's Evelyn Cheng contributed to this report.