There's not much in the way of New Year cheer for China's beleaguered stock market as it braces for the resumption of new listings that could dent demand for existing shares.
Still, the lifting of the freeze on initial public offerings (IPO) could boost sentiment and once markets have digested the new supply, focus should turn to the positive factors for the benchmark , analysts say.
(Read more: China approves new IPOs, ending listing freeze)
China has approved six more companies to list on stock exchanges on the mainland in the second batch to receive approval since regulators ended a year-long freeze on IPOs just over a month ago, state media reported on Thursday. Earlier this week, China approved the listing of five firms.
(Read more: China shares tumble on plans to lift IPO freeze)
Tai Hui, chief market strategist, Asia at J.P. Morgan Funds, said new rules governing the new listings should help boost sentiment in the stock market. In recent years, Chinese firms have been dogged by a number of accounting scandals.
"I think definitely it will give people some confidence about investing in IPOs," Hui told CNBC.
Analysts said they expected financial stocks to gain from the lifting of the IPO freeze since banks should gain from fee income related to new stock market listings.
Photo taken on December 30, 2013 shows investors looking at stock prices on screens in a securities exchange in Shanghai.Peter Parks | AFP | Getty Images
They added that a pick-up in the global economy and expectations for concrete economic reforms from China's leadership should help stocks recover over the course of 2014.
"If the Chinese economy is going to stabilize, Chinese banks will do well," said Jackson Wong, vice president at Tanrich Securities.
Hui at J.P. Morgan Funds added: "We think China is going to be one of the better performers in Asia this year for a number of reasons, valuations have always been very attractive."
"More importantly, you should get a lot more clarity on new policies as well as a synchronized global recovery. That will be critical in underpinning a recovery in Chinese stocks," he said.
Goldman Sachs expects broad gains in China shares in 2014 and has an overweight call on the Hang Seng China Enterprises Index.
(Read more: Time to get picky on China stocks: HSBC)
Short-term pain?
The Chinese stock market will still have to brace for a deluge of new listings in the near term, analysts said.
