China's supply-side reforms have shown signs of speeding up, which could boost investor confidence in the medium term. [Geng Yuhe/For China Daily]

The Chinese stock market could rise higher this week as fears of the repercussions of the British vote to leave the European Union will likely ease, analysts said.

"The global forecast for China markets seems upbeat on fading concerns over the Brexit developments while economic data continues to display signs of improvement," said Lukman Otunuga, research analyst at ForexTime, an online foreign exchange trader.

"The Shanghai Composite Index could venture higher as the renewed risk appetite encourages investors to seek riskier assets," Otunuga said.

The People's Bank of China, the central bank, was believed to have intervened in the foreign exchange market last week to stabilize the Chinese currency and to ease investors' anxiety in the wake of the Brexit vote.

The benchmark SCI gained 2.74 percent last week to 2932.48 points.

Some analysts said despite the uncertainty surrounding the post-Brexit scenario, the domestic economic trend will continue to anchor investors' mood toward the A-share market in coming months.

Gao Ting, head of China strategy at UBS Securities, said in a recent report that while global risk appetite will continue to fluctuate this week and may affect the Chinese stock market, domestic economy and the policy outlook remain the A-share market's core concerns.

"May's economic data are mostly in line with market consensus, with economic activity basically stabilized and credit growth back to normal," Gao said in a research note.

He said China's macroeconomic policies will continue to stay supportive in coming months, and the effect of the previous policy of steady growth and credit support will help maintain economic growth momentum at the current level.

Wang Yi, a strategist at Great Wall Securities Co Ltd, said the economic data in May was in line with expectation, which reinforced the weak economic fundamentals.

"Investors should in particular take note of the substantial decline in private fixed-asset investment in May, which reflected a low level of willingness to expand capacity by private capital," he said.

But Gao at UBS noted that China's supply-side reforms have shown signs of speeding up, which could boost investor confidence in the medium term.

"In our view, once there is substantial progress on capacity removal (eg, announcement of the list of zombie enterprises and non-performing loan disposal measures), the A-share market's medium-term confidence will be greatly boosted.

"Given that fundamentals and liquidity remain neutral overall, the market may remain at the current level. We continue to prefer value-oriented sectors such as home appliances and food and beverage," he said.

Raymond Ma, portfolio manager at Fidelity International, said that while China's macro data remains weak, investors should keep an eye on innovations, which are viewed as the new growth driver over the next decade.

"The growing number of low-cost engineers, China's rising commitment to R&D, the rapid development of China's internet ecosystem, as well as the establishment of supply chains of global leading IT companies in China will speed up and open up new fronts in the area of innovation," he said.