(Bloomberg) -- Investors should brace 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 Inc.

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

China’s benchmark stock index posted the biggest gain since 2008 on Monday, entering a bull market, following a string of measures to turbo-charge 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 Wednesday for a 13th day, before dipping lower on Thursday. Optimism remains high that the rally is different from previous short-lived rebounds, with a growing number of global money managers turning bullish on the market. But Nomura is unconvinced.

“While investors might still be OK to indulge in the boom for now, a more sober assessment is required,” the bank said.

The vulnerabilities of the economy stem from almost four years of the housing crisis, much higher local government debt, escalating geopolitical tensions and other factors, Nomura said.

Should the rally turn to bust, worse could be to follow, with Beijing potentially resorting to printing money, the bank said. In that case, capital flight will likely be rampant and China’s yuan may come under depreciation pressure.

To Neo Wang, Evercore ISI’s New York-based managing director for China research, a repeat of the 2015-style stock rout would be something China’s top leadership can’t afford.

The Shanghai Composite Index more than doubled from September 2014 through its June 12, 2015 peak. Then the equity gauge plunged 40% in about two months.

Still, Wang says authorities have more instruments they can use to prop of stocks this time around. “New capital market liquidity tools like swap and relending facilities have not debuted yet,” he said.

Nomura’s baseline scenario is a bubble that busts “on a smaller scale.” Beijing is likely to introduce fiscal measures to stabilize demand and maintain local governments’ basic operations, but it may fail to address any serious structural problems and clean up the real mess in the property sector, according to the economists.