Stock craze: an empirical analysis of PER in Chinese equity market

Mohamed El Hedi Arouri () and Chen Xiang LIU ()
Additional contact information
Chen Xiang LIU: EconomiX, Université de Paris X—Nanterre

Economics Bulletin, 2008, vol. 14, issue 1, pages 1-17

Abstract: China’s Shanghai and Shenzhen stock markets have been on a bullish run since the end of the split-share reform. The sharp gains are raising worries about stock overvaluations. We investigate the determinants of booming stock markets in modelling PER (price-earning ratio) over the available sample period 2000-2007 in Chinese A-share market with co-integration and error correction model specification. These results show that the market is driven primarily by the massive influx of fresh funds rather than corporate fundamentals. Regulators have been striving to cool down the surging stock markets for the good of long-term economic development and social stability.

Keywords: Shanghai and Shenzhen A-share markets; price earning ratio (PER); market bubble; regulation (search for similar items in EconPapers)
JEL-codes: N2 (search for similar items in EconPapers)
Date: 2008-07-31
View list of references

Downloads: (external link)
http://economicsbulletin.vanderbilt.edu/2008/volume14/EB-08N20002A.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:ebl:ecbull:v:14:y:2008:i:1:p:1-17

Access Statistics for this article

More articles in Economics Bulletin from Economics Bulletin
Address: Economics Bulletin, Department of Economics, 414 Calhoun Hall, Vanderbilt University, Nashville TN 37235, USA
Series data maintained by John Conley ().