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Chinese markets have tumbled more than 60 per cent since their peak in September 2007, but still offer investors a good bet, according to JPMorgan Asset Management.

Slowing global growth, rising inflation and stretched valuations took their toll on the Chinese market, which was one of the top-performing markets in 2006-07.

However, JPMorgan said of all the major markets in Asia, China offers investors the best risk-reward trade-off.

"Any rally in Asian markets will likely be led by China, especially since it is the country in which inflation was the first to peak and the country with one of the strongest fiscal positions," the asset manager said.

The People's Bank of China cut the one-year benchmark lending rate by 27 basis points to 7.2 per cent in September to maintain "steady and fast" economic growth.

JPMorgan said this move was the first in a series of monetary loosening measures, which led to two further cuts in lending rates by 2.7 per cent each time.

China’s State Council also announced a 4trn renminbi (£386bn) fiscal stimulus package equivalent to 15 per cent of GDP over two years.

"This should be very supportive for domestic-orientated sectors such as infrastructure and consumption. This gives us comfort over China's growth prospects," said JPMorgan.

China's sovereign wealth fund, CIC, is also to buy China's biggest banks in the A shares market in a move to stabilise and support the domestic A share market.

As the global economy judders to a halt, China's domestic economy remains fairly solid in JPMorgan's eyes.

Retail sales increased by 23 per cent year-on-year in September, the strongest pace since at least 1999, while urban incomes rose by 14.4 per cent and rural cash incomes by 19.8 per cent year-on-year.

Domestic demand accounted for 78 per cent of China's economic growth last year, and investment and domestic consumption will likely be the main drivers of its future expansion, according to the asset manager.

"The Chinese Communist party has been showing increasing concern about the potential slowdown of the Chinese economy given the further downshift in global demand and financial market turmoil," said JPMorgan.

Significantly, the asset manager said, the party has changed its policy goals for the rest of the year modestly to "maintaining a stable and fast growth" and "controlling inflation at an 'acceptable' level to the economic growth", away from the two "preventions" - overheating and overall inflation - proposed earlier.