June 29, 2015

"The average Chinese stock is now trading at 30 times earnings."

Fortune China’s stock market is up by 25%, but it has been a rocky road, and lately it’s been all down hill. by Stacy Jones and Stephen Gandel

'China’s stock market is up 25% this year. But it has been anything but a smooth ride. Shares of Chinese stocks rocketed up for most of the first half of the year, increasing by nearly 50% in the first five-and-a-half months of the year.

'From that point, though, the market has mostly gone straight down. Stocks have been dipped by nearly 25% over the past two weeks or so. And the plunge is picking up steam. China’s Shanghai Composite index has dropped by roughly 11% in the last two trading days. That’s the equivalent of a nearly 2,000 point plunge in the Dow.

'Where do we go from here? Some have predicted the drop in Chinese stocks for a while. China’s economy has been slowing, and corporate profits have been falling. So the fact that Chinese stocks were rising as much as they were was a bit of a mystery from the beginning of the current run. China’s central bank has been pumping money into its economy, partly to boost its stock market and help its economy more broadly.'

No comments: