The chart signalling another 50% drop for China

The frightening pace of declines in China's benchmark stock index is not over, according to several market analysts, with predictions that the market could half in value over the next six to nine months.

The Shanghai Composite index - still in its relative infancy compared to its U.S. counterparts - screamed higher by 54 percent up until the middle of June. After hitting a peak this year of 5,166 points the benchmark has since tanked 38 percent in 57 days, erasing all the gains for 2015.


But there's more to come, according to Quentin Baker, fixed income derivatives trader at Mako Financial Markets, who has been focusing on the Chinese index in his latest technical analysis.

"It is calling for a significant bear move even at current levels despite the selloff that we've seen over the last several weeks. The levels we are talking about are 1,500 for the Shanghai Composite which is another 50 percent decline from here," he told CNBC Wednesday.

Even government intervention by the Chinese central bank won't affect this route downwards, according to Baker, who believes that the "market will win" and "will go where it wants to go."

Luis Costa, head of CEEMEA FX and rates strategy at Citi, said that the index is more of a "mom and pop" investment vehicle within China and urgently needed the support of professional investors to provide liquidity.

The Shanghai market is currently moving completely independent of economic fundamentals in China, according to Laurence Bensafi, deputy head of emerging market equities at RBC Global Asset Management.

Investors look at computer screens showing stock information at a brokerage house in Shanghai.
Aly Song | Reuters
Investors look at computer screens showing stock information at a brokerage house in Shanghai.

China's data might be weakening after years of double-digit growth, but many analysts are quick to point out that the wild swings in the index are far removed from the underlying strength of the world's second largest economy.

"We're very cautious when we look at that market," Bensafi told CNBC Wednesday. "It's totally possible that the market could drop by 50 percent, you know the valuations are very extreme."

The sudden and sharp falls in Chinese stocks have rattled markets globally and fuelled concerns about the outlook for the world's second biggest economy. As a result, many analysts have talked about where the China's stock market might be heading.

Many have also spoken of international exposure to China with just 2 percent of China's equities actually owned by foreigners, according to Capital Economics.

Tom White, CIO of Thomas White International, told CNBC last week that he was still bullish on China and called the recent moves a "blip up and a blip down." Despite conceding that not many people knew much about the country's blue-chip index, he predicted that it could be the biggest market in the world within the next twelve years.

Meanwhile, Sandy Jadeja, chief market strategist at SignalPro, told CNBC last week that his own technical analysis pointed to a 79 percent retracement in the Chinese market from its year-to-date highs. With the index closing at 3,155 points on Wednesday, this would imply a further fall to 2,550 points. However, he added that the index could rally after reaching those lows.