China's stock market has been experiencing significant growth recently, but there are concerns of a potential downturn according to a note from BofA Securities. The current rally shares similarities with the boom and crash cycle of 2015, a period when China was transitioning its economy and Alibaba's public offering on NYSE played a significant role in China's tech sector.

The recent surge in Chinese stock markets contrasts with the downward trend in Wall Street markets, but BofA warns of a "meaningful correction" ahead. They point out resemblances in economic restructuring, policy support, and technological advancements between the current market cycle and that of ten years ago.

The market performance is also attributed to the popularity of DeepSeek, a cost-effective Chinese AI model, and Beijing's efforts to boost private consumption. Despite the substantial gains in the Hang Seng China Enterprises Index and the MSCI China Index, concerns linger among investors, particularly regarding China's economic fundamentals and external factors like Trump's tariffs and geopolitical tensions.

While China's stock market rally is partially fueled by the success of DeepSeek and apprehensions over Trump's policies, some investors are hesitant to invest further at current levels. The overall sentiment appears to be cautious among onshore investors in China, who are monitoring signs of economic improvement amidst uncertainties in the global economic landscape.