BofA Warns of Potential Chinese Stocks Correction
25 March 2025 · Uncategorized ·
Source: · https://finance.technews.tw/2025/03/19/bofa-warns-of-chinese-stock-correction-soon-in-2015-repeat/
Bank of America Securities anticipates a significant correction in China’s stock market, according to media reports citing foreign sources. This expectation mirrors the conditions observed in 2015.
Bank of America strategists, led by Winnie Wu, noted that both the Hang Seng Chinese Enterprises Index (HSCEI) and MSCI China have risen at least 30% from their January lows—a pace reminiscent of pre-market crash activity in 2015. The HSCEI reached a new high in May 2015 before declining nearly 50% by February the following year.
The strategists observed that current economic fundamentals resemble those seen during China’s previous rebalancing and policy cycles ten years ago, suggesting potential fragility in market rebounds driven solely by multiple expansions. Bank of America cautioned that recent optimism surrounding Chinese stocks—fueled by DeepSeek's launch this year, global funds reassessing overlooked equities due to the government’s growth objectives, and weakening confidence in U.S. markets—may be unsustainable.
During visits to Shanghai, strategists noted growing anxiety among long-term investors regarding employment challenges and a lack of improvement in deflationary pressures or credit demand. While geopolitical tensions have been largely disregarded by some, concerns about potential bubbles within certain tech sectors are emerging.
(Translated with permission from MoneyDJ News; Image source: Shutterstock)
Bank of America strategists, led by Winnie Wu, noted that both the Hang Seng Chinese Enterprises Index (HSCEI) and MSCI China have risen at least 30% from their January lows—a pace reminiscent of pre-market crash activity in 2015. The HSCEI reached a new high in May 2015 before declining nearly 50% by February the following year.
The strategists observed that current economic fundamentals resemble those seen during China’s previous rebalancing and policy cycles ten years ago, suggesting potential fragility in market rebounds driven solely by multiple expansions. Bank of America cautioned that recent optimism surrounding Chinese stocks—fueled by DeepSeek's launch this year, global funds reassessing overlooked equities due to the government’s growth objectives, and weakening confidence in U.S. markets—may be unsustainable.
During visits to Shanghai, strategists noted growing anxiety among long-term investors regarding employment challenges and a lack of improvement in deflationary pressures or credit demand. While geopolitical tensions have been largely disregarded by some, concerns about potential bubbles within certain tech sectors are emerging.
(Translated with permission from MoneyDJ News; Image source: Shutterstock)