China's stock boom may turn to bust as in 2015, Nomura warns

Investors should brace themselves for the biggest stock rally in China in 16 years to turn to bust, with the economy on a much weaker footing than before the pandemic, said Nomura Holdings.

In the most gloomy scenario, “a stock market mania would be followed by a crash, similar to what happened in 2015”, economists led by Dr Ting Lu wrote in a note to clients on Oct 3. That outcome may have a “much higher probability” than more optimistic scenarios.

China’s benchmark stock index posted the biggest gain since 2008 on Sept 30, entering a bull market, following a string of measures to turbocharge the growth of an ailing Chinese economy.

Since then, the onshore markets have closed for holidays.

Hong Kong’s benchmark Hang Seng Index soared on Oct 2 for a 13th day, before dipping lower on Oct 3 and closing up 2.8 per cent on Oct 4.