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Those PE's made sense (to some/most) when the economy was growing 8-9% and revenue was following that growth, but now that it is down to ~3% with revenue follow
by nikcub 11y ago
Those PE's made sense (to some/most) when the economy was growing 8-9% and revenue was following that growth, but now that it is down to ~3% with revenue following (or shrinking for a lot of the larger companies) those prices really need to come down and might even be discounted to reflect regulatory risk.
The hedge funds who saw this coming are doing very well at the moment [0] [1]
[0] http://www.barrons.com/articles/hedge-fund-posts-strong-gains-by-shorting-china-1440825847 http://www.barrons.com/articles/hedge-fund-posts-strong-gain...
[1] http://www.bloomberg.com/news/articles/2015-11-17/hedge-fund-gaining-138-says-china-short-targets-easier-to-spot http://www.bloomberg.com/news/articles/2015-11-17/hedge-fund...
- dmix 11y agoDoesn't this projection depend on the assumption these companies operate entirely within China and not global markets?
- nikcub 11y agoChinese growth was becoming less dependent on exports as global demand flattened out: http://www.usfunds.com/media/images/frank-talk-images/2012-frank-talk-images/2012-ft-jan-jun/ChinaGDPgrowth-041212.gif http://www.usfunds.com/media/images/frank-talk-images/2012-f... The current growth slowdown is largely due to decreased domestic consumption growth: http://www.brookings.edu/~/media/Research/Files/Blogs/2014/04/22-china-growth-data/china-contributions-gdp-growth-dollar-2.jpg?la=en http://www.brookings.edu/~/media/Research/Files/Blogs/2014/0... Of the top listed companies in Shanghai, most are banks, petro, insurance, energy, etc. that are domestic driven (the SSE website is down at the moment but the list is here: http://english.sse.com.cn/listed/list/ http://english.sse.com.cn/listed/list/) I don't think there were many expecting that a public company investment in China would be supported by exports.