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Endowment Index™

China Market Valuation Update

By August 27, 2015No Comments

China Large and Small Cap Indices seem to be approaching longer term valuation levels. Also:

  • China’s margin debt is substantially lower. Outstanding margin debt on the Shanghai and Shenzhen stock exchanges fell to 1.25 Trillion Yuan on Monday from a record high of 2.27 Trillion Yuan on June 18th. Stock market peaked on June 12th.
  • Large Cap Stocks estimated P/E ratio is approx. 10 which represents 2013 P/E 5 Year lows.
  • While valuation multiples have contracted globally, the Chinese P/E multiple has contracted more. Chinese Large Cap Stocks are now cheaper than the S&P 500 and the Dow Jones Industrials.
  • Chinese Small Cap Stocks are still trading at a higher P/E relative to US Small Cap Stocks.

We continue to maintain an allocation to China A Shares in the Endowment Index.