Investors are being warned to expect a continuing roller-coaster in the markets but a potential silver lining in a delay to the raising of interest rates.

After a week which saw a share price crash in China spook global markets, then a sharp rebound on strong signals from the US, views were divided over whether the steep falls are a natural correction or could be the start of a ‘bear market’ downturn.

Hugh Young, Aberdeen Asset Management’s veteran head of Asian equities, said in the aftermath of the Chinese scare that it was “nothing like the dotcom crash, Sars, or most recently the global financial crisis” and that comparisons with the Asian market crisis of 20 years ago “made no sense”.

Robin Geffen, chief investment officer at Neptune Asset Management, said the Chinese stockmarket was still a very small part of the country’s economy and had become “extremely overvalued” before the bubble burst. “Over one year the Shanghai Composite Index is still up almost 45per cent...“we do not believe there is evidence of ‘freefall’ in any real economic sense.”

But Jason Hollands, managing director at Tilney Bestinvest, warned: “A rapidly slowing Chinese economy affects us all because since the global financial crisis broke in 2008, Chinese economic expansion has contributed over 50per cent of all world growth, and asset markets are incredibly interconnected.” He said only a quarter of the revenues of FTSE-100 companies were generated in the UK while 37per cent came from emerging markets, and with the index’s significant weighting to oil and mining stocks it was bound to be more dramatically affected.

“Of course when markets are tumbling and fear drives investors to run for the exit, it can often present buying opportunities. With valuations spiralling lower, some might be tempted to invest. However, we remain very wary of emerging market equities and believe the current turmoil could play out for some time yet.... China’s vast credit binge could yet unwind into a full blown crisis with the cracks in the Chinese system only starting to emerge properly.”

Alan Miller, chief investment officer at SCM Direct, said the mood was similar to August 2011 when global economic growth was faltering, and there were now fears in some quarters of the Chinese devaluation leading to a global currency war and deflation. “Allied to these fears is the worry that Western central banks have nearly dissipated their firepower and once the US starts normalising interest rates, the cost of debt worldwide will rise materially further deteriorating growth prospects.

“Our view is that the best way to cope when markets become volatile or you are being bludgeoned every day with losses is to stand back, look at the fundamentals of what you are holding and re-assess but do not change for change’s sake.”

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: "There are reasons to be positive. A lower oil price will boost household budgets in the UK, Europe and the US, which should feed through into spending.

“Furthermore as long as lower petrol prices are keeping inflation down, central banks in the UK and US are unlikely to raise interest rates, providing a supportive background for companies and consumers.”

Nigel Green, chief executive of deVere group, said: “I believe that the events of this week will prove to serve the global economy well in a wider context. This is because the Federal Reserve and the Bank of England are now less likely to raise interest rates this year and when they do raise them they are likely to be more cautious. If the Chinese stock market had fallen after any interest rate rises, the fallout could have been much worse.”

He went on: “Bear markets typically last nine to 18 months. This is why long-term investors would be wise to keep buying in a measured and strategic way, and not panic-sell, as by the beginning of next year we are likely to start seeing the back of the bear market.”

Mr Khalaf said the UK market he said, was now “neither particularly expensive nor particularly cheap by historical standards”, but added: “ But compared to the 10-year gilt yielding 1.8per cent, and cash returning next to nothing, they still look attractive."

Tilney Bestinvest says:

*Avoid knee-jerk reactions to events

*Emerging market shares may have further to fall

*Europe and Japan may be best places to invest

*Pick Asian funds with low Chinese exposure

*In the UK stick with domestic-focused companies

*Avoid commodities and the smallest stocks

*Consider absolute return funds