Having experienced a rare, week-long stock rally after Beijing fired its policy bazooka to boost the economy, a more sober assessment is required as the possibility of a stock crash looms large, an economist has warned.
“Given the current market momentum and our tracking of sentiment on China’s social media, the risk of repeating the epic boom and bust in 2015 could rise rapidly in coming weeks,” said Lu Ting, chief China economist at Japanese investment bank Nomura, on Thursday.
“While investors might still be OK to indulge in the boom for now … we wish Beijing could be more sober.”
The eventual scale and content of the fiscal package might be quite improvised and uncertain due to the brewing stock bubble
And while the stock market valuations and leveraging are still far from slipping into a crisis, China’s economy remains in an emergency mode, mainly due to the ongoing property slump, Lu added.
