Random Thoughts

Uncovering the P/E (price/earnings) ratio for the Chinese stock market (Shanghai Stock Exchange) is not so trivial. One will quickly discover a relative shortage of data in English-based sources. Numbers will have a wide dispersion, unimaginable for the same metric for U.S. indices.

Nevertheless, according to this publication it stood at 11.920 on 01 Jan 2024. On the other hand, Bloomberg reports "The price-to-earnings ratio based on expected profits for Chinese companies sits below 10". This piece is very interesting, for it suggests that institutional money, based on conducted surveys, plans to increase allocations to China.

Ratios like P/E are an important metric in fundamental analysis for individual companies and markets as a whole. However, these valuations ought to be compared against historical norms of a given market, for long running averages between U.S. and emerging markets differ substantially. The gloom story of the Chinese economy has been well-established and telegraphed on this channel. That's what makes investing so difficult, for it's not enough to identify the economic outlook, but also be able to price it. As the adage goes, "There are no shitty assets, only shitty prices". It's easy to claim "the time to buy is when there's blood in the streets" at a later time, after the fact. It requires certain body parts to be made out of steel to act on it in the heat of the battle.

Perhaps a market correction of 60% with a P/E valuation below 10 constitutes as blood in the streets.
#finance

January 2024

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www.tgoop.com/random_from_sherlock/150

230 viewsedited  Jan 3, 2024 at 19:12

Uncovering the P/E (price/earnings) ratio for the Chinese stock market (Shanghai Stock Exchange) is not so trivial. One will quickly discover a relative shortage of data in English-based sources. Numbers will have a wide dispersion, unimaginable for the same metric for U.S. indices.

Nevertheless, according to this publication it stood at 11.920 on 01 Jan 2024. On the other hand, Bloomberg reports "The price-to-earnings ratio based on expected profits for Chinese companies sits below 10". This piece is very interesting, for it suggests that institutional money, based on conducted surveys, plans to increase allocations to China.

Ratios like P/E are an important metric in fundamental analysis for individual companies and markets as a whole. However, these valuations ought to be compared against historical norms of a given market, for long running averages between U.S. and emerging markets differ substantially. The gloom story of the Chinese economy has been well-established and telegraphed on this channel. That's what makes investing so difficult, for it's not enough to identify the economic outlook, but also be able to price it. As the adage goes, "There are no shitty assets, only shitty prices". It's easy to claim "the time to buy is when there's blood in the streets" at a later time, after the fact. It requires certain body parts to be made out of steel to act on it in the heat of the battle.

Perhaps a market correction of 60% with a P/E valuation below 10 constitutes as blood in the streets.
#finance

January 2024

BY Random Thoughts