HSBC: A-shares raised to 'neutral' from 'underweight'  "We had lowered our view on the A-share market to underweight in April with the lowest index target on the Street due to the risk of high leverage and selling pressure from corporate insiders.  "Now we are raising the market back to neutral as we see value emerging in view of four factors 1) the balance of margin financing dropped over 22 percent, or RMB500bn from the peak in mid-June, and the worst of the deleveraging might be behind us; 2) A-share corporate insiders' net selling has dropped significantly in recent weeks; 3) the regulator has more options at its disposal to stabilize the market and restore confidence; and most importantly, 4) fundamentals could improve in 2H15, e.g. lower interest expenses could lead to higher margins and profits."  "We make no changes to our index targets for MSCI China, HSCEI, Red-Chips, and HSI, but we raise our [2015] target for SHCOMP to 4,000 from 3,400 and for CSI300 to 4,200 from 3,800."  - Roger Xie, strategist at HBSC  Bank of America Merrill Lynch: Watch out for collateral damage  "If the market continues to fall sharply, stock lending related losses could run into Rmb trillions, of which, banks and brokers may have to bear a meaningful share. These potential losses can be especially dangerous to brokers whose capital base is less than Rmb1tr.  "Even more important, the opaqueness of China's financial system and the lack of clear definition of risk responsibility mean that contagion risk is high, similar to the subprime crisis. We had always considered the risk of a financial crisis in China as high. What has happened in the stock market has likely increased the risks considerably and also brought forward the timeline by our assessment – the leverage is much higher now and economic growth rate, potentially lower."  - David Cui, strategist at Merrill Lynch  Goldman Sachs: Still overweight China  "We remain overweight China, favoring offshore H shares to onshore A shares given relative performance and valuation differentials. The investment case continues to rest on the key pillars of reform and liquidity.  "Looking forward, we expect the pace of reform to remain rapid, notably in the areas of financial markets, fiscal matters and SOEs. Key examples include the potential imminent announcement of the SZ-HK (Shenzhen-Hong Kong) Connect scheme and the exchange of further tranches of bank debt for municipal bonds which we believe will serve to mitigate credit concerns associated with local government financing vehicle debt.  "We also expect further policy ease/stimulus in the form of a policy rate cut and further reductions to bank reserve ratio requirements, as well as greater encouragement of infrastructure investment on the fiscal front."  - Timothy Moe, chief Asia Pacific equity strategist at Goldman Sachs
With the outlook for China shares still hazy, we take a look at how top international banks are reading the latest market developments.