Chinese stocks may be near to end of their rally, Nomura warns
Optimism is likely to continue during the National People's Congress and the Chinese People's Political Consultative Conference early this month as investors look for an acceleration in investment after the meetings.
A major correction in the MSCI-China stock index is expected to come soon as investors re-calibrate the outlook for the mainland's economic dynamics, Nomura Securities said.
However, that could be the end of the rally, Nomura said.
"We are more pessimistic than consensus," said Wendy Liu, equity research head at Nomura. "Capital preservation would be very important over the next several months."
The MSCI Index had gained almost 30 per cent, from a low on September 5 of 51.59 points to 66.73 points on February 1. However, it has since shed some of those gains, to be up 19 per cent from the September low, at 61.38 points.
In Nomura's view the pace of credit expansion on the mainland seems to have peaked. Policy-tightening in the property sector is expected to increase in coming months.