China's stock market faces good prospects in 2015  

社科院金融所预测：2015年A股看至4000-5000点

(ECNS) -- The Shanghai Composite Index is expected to hit between 4000 and 5000 next year, according to Yin Zhongli, Deputy Director of the Institute of Finance and Banking at the Chinese Academy of Social Sciences.

Recently, a research paper by securities analysts at JPMorgan Chase said that Chinese economic growth will probably trail that of its stock market in 2015.

Yin Zhongli agrees that economic growth in China would continue to slow and thinks that more capital will flow to the stock markets, according to the 21st Century Business Herald.

In the face of lower economic growth, People's Bank of China will probably lower the interest and reserve rates next year, which means risk-free return rates would also drop.

Although economic development in 2015 will remain relatively weak, listed companies in many sectors will witness faster earning growth. For example, though bulk commodity prices slumped worldwide, sectors such as electricity, aviation and steel saw unexpected profits.

Profits also went up in areas such as water conservation and infrastructure due to greater investment from the Chinese government, both central and provincial.

Another reason for good stock market prospects involves blue chip stocks being relatively cheap, with bank shares valued at only five times their price/equity ratio.

Once confidence in the stock market is restored, bank shares market risk premiums would fall.

For the valuation of blue chip shares to be in line with average levels seen on international markets, the Shanghai Composite Index will have to rise.