This year will "kick off" a three-year bull run in China's stock market, investment bank Nomura Securities Co said in a report.

The three-year rally will be driven by both earnings growth and valuation re-rating as structural reforms and economic rebalancing yield higher operating efficiency and rate of return in the corporate sector, the bank said.

Moreover, capital and financial market reforms should help to improve public shareholder protection in A-shares, thus attracting more allocation of Chinese household assets to equities, it said.

"We anticipate the Chinese households to gradually raise asset allocation in favor of stocks, helped in part by improved investor protection," Wendy Liu, an equity strategist of Nomura, wrote in the research.

Liu said Chinese banking stocks may be dragged by expectation of lower interest gains of the country's lenders in the coming years and price correction will take place in the first quarter this year.

Nomura forecast that China's GDP growth will slow to 6.8 percent year-on-year in 2015, below the 7 percent target set by Beijing.

"Our economists believe that domestic challenges, especially the slowdown in investment growth, will drive the downtrend in growth. For example, the property market will likely continue to correct in 2015 and this, accompanied by stricter control over local government borrowing, will likely pressure fixed asset investment growth," the report said.