Friday, June 22, 2007
Comparing the 4 biggest stocks bubbles
Chinese A-shares now have an average price-earnings (p/e) ratio of around 45. At their peaks, the average p/e ratio of the Nikkei 225 in 1989 and the NASDAQ at the start of 2000 were both well over 100. This suggests that Chinese share prices could have much further to climb before the bubble bursts—unless China's policymakers are braver than Mr Greenspan and take bolder action to dampen the market now.