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  • ksn_44 ksn_44 • Nov 19, 2012 9:13 AM Flag

    PE for the Shanghai stock market----some similarities to XIN

    The Shanghai measure trades at 9.6 times estimated profit for 2012, compared with the 17.8 average multiple since Bloomberg began compiling the weekly data in 2006. Trading volumes were 31 percent lower than the 30-day average, according to data compiled by Bloomberg. Thirty-day volatility was at 12.8, compared with this year’s average of 17.1.

    China completed the most important phase of a once-a-decade power transition last week, with Xi Jinping succeeding Hu Jintao as head of the ruling Communist Party. Wang Qishan, vice premier overseeing the financial sector, was named head of the party’s discipline body.

    The nation’s financial reforms will continue under the new leadership even though Wang won’t be overseeing the economy and Zhou Xiaochuan will likely step down as head of the central bank, according to Kenrick Leung, fund manager at Amundi Hong Kong Ltd.

    The outlook for Chinese stocks is improving as the risk of a hard landing has dissipated, said Leung, whose Greater China fund has beaten 91 percent of rivals this year according to data compiled by Bloomberg.

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    • hmmm26 hmmm26 • Nov 19, 2012 9:49 AM Flag

      Good post, KSN.

      I can add two other pieces of data to compare to Shanghai's 9.6 P/E. As of right now, Nasdaq's average P/E is 19 and the NYSE's is 16.4.

      The discount on the Chinese exchanges is partially due to the high frequency of Chinese frauds, so we shouldn't expect that gap will ever completely close, but the gap might still be bigger than it should be, owing to China stocks' poor reputations in the west.

      It's an easy thing to forget, but the SEC's superior reporting and policing abilities keep all of our stocks' prices higher than if the exact same companies listed somewhere else.

      Chris

      • 1 Reply to hmmm26
      • ksn_44 ksn_44 • Nov 19, 2012 11:15 PM Flag

        hmmmm.....I am not sure Shanghai's stock market performance has any FRAUD relevance to any Chinese stocks listed here, not trying to be a smart #$%$, I just don't think there is a connection. Now is there a connection as to how US-listed Chinese stocks perform IN GENERAL in relation to how Shanghai performs? I have to think a resounding YES. Particularly those in RE which as you know is under the long arm of the Chinese law and will be for quite some time to come.

        Right now Shanghai's stock market flat out sucks, as has sucked for three years. After a buffo performance today in the US, half way through their day and Shanghai is down right now. This is like a lead balloon, in my opinion, on XIN's price performance.

        Again, and I have beaten this to death, the complex question of allowing their economy to grow while at the same time suppressing RE is a hard one to figure. I certainly do not know the way around it, but, er, perhaps China does. For my part I hope they can figure it out.

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