CHINA’S stocks haven’t been this cheap relative to bonds in more than two years, and analysts say they’re about to get cheaper.

The equity selloff in the world’s second-largest economy has left the Shanghai Composite Index’s earnings yield — the inverse of the more commonly used price-earnings ratio — at 7.6 percent Monday, widening the gap with the yield available on five-year AAA rated corporate notes by the most since March 2016. Analysts aren’t rushing to call a reversal anytime soon, as investors continue snapping up bonds as China shifts toward easing, while stocks are shunned amid dwindling risk appetite and concern over an economic slowdown.

“There’s a lack of positive factors for stocks in general, so the trend is likely to continue,” said Xiong Yun, founding partner at Lingwang (Shenzhen) Investment Management Co. “Among bonds, corporate debt is likely to outperform sovereign and quasi-sovereign notes, as the latter have already rallied quite a lot this year.”

The Shanghai Composite Index has slid 18 percent this year through Monday, becoming the worst performer in the world. Bonds, meanwhile, extended a two-quarter advance, with corporate debt catching up with sovereign over the past month on a slew of stimulus measures. The spread between Shanghai Composite’s earnings yield and corporate notes touched 3.43 percentage points. The equity measure pared some of this year’s loss after rebounding 2.7 percent Tuesday. (SD-Agencies)