NEW YORK (TheStreet) -- If you're going to invest in China, focus on indexes rather than picking individual names, one strategist said.
"Right now, if you're trying to bottom-feed in China, stick to a broad index, because that will be what bounces, rather than trying to pick winners and losers," said Nick Colas, chief market strategist at Convergex, a New York-based brokerage firm.
China's Shanghai Composite Index rose 82% year-over-year, but is down 28% since its high on June 12. On Thursday, the index finished the session 5.76% higher, its biggest gain in six years.
The selloff in recent weeks has been fueled by too many investors buying stocks on margin. To stop the bleeding, Chinese officials cut interest rates and suspended trading on over 50% of China-listed stocks. It also barred larger shareholders from selling stocks for six months.
"Anybody who wants to get involved today needs to understand they could lose another 20% or 30% as investors from the top already have," said Colas.
For investors wary of investing in mainland China, Colas said investing in Chinese companies listed in the United States is a safer strategy. Investors seeking long-term positions should focus on a couple of sectors they really know and understand, he added, like the consumer sector or technology.
Some Chinese companies with shares in the U.S. include well-known e-commerce giant Alibaba (BABA) - Get Alibaba Group Holding Ltd. Sponsored ADR Report, Baidu (BIDU) - Get Baidu, Inc. Sponsored ADR Class A Report and China Mobile (CHL) - Get China Mobile Limited Sponsored ADR Report.
Alibaba shares have slumped 8% over the past month, at one point earlier this week hitting their lowest level since the IPO.
Internet company Baidu's stock has lost 6.8% since mid-June, and China Mobile has fallen 8.6%.
Meanwhile, China-geared exchange traded funds are another option that provide transparency and liquidity, Colas said.
"There's a lot of interest [in China] and exchange traded funds are one very convenient way to play it," he noted.
The KraneShares CSI China Internet ETF (KWEB) - Get KraneShares CSI China Internet ETF Report has advanced 15.4% year-to-date, and the Global X China Consumer ETF (CHIQ) - Get Global X MSCI China Consumer Discretionary ETF Report has jumped 8.5% since the beginning of the year, though both funds have slumped by double digits over the past month.