"The sharp decline in Chinese stocks is approaching a milestone: With a 4% drop Friday, the market has fallen by nearly half since its peak last fall. The decline has wiped out nearly $2.5 trillion of wealth and is testing the government's apparent resolve to let the market find equilibrium on its own. ... The other big loser is India, which was the other big winmner over the past few years. The Mumbai Sensex Index is down 19% so far this year. ... A widely accepted measure of stock valuations, the price-earnings ratio, has fallen on the Shanghai market to 35 times announced income from a peak of about 70 times last year, though some say accounting remains opaque at many Chinese companies", WSJ, 19 April 2008.
The notion of a market "worth" 70X earnings is absurd. China looked like a bubble to me, see my 12 October 2007 post. China's market reminded me of two articles by Jeremy Siegel (JS), a Wharton finance professor which appeared in the WSJ on 14 March 2000 and 19 March 2001. They are worth reading, bear in mind when they were written. They are available at http://www.jeremysiegel.com/.
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