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P/E ratio drops for newly listed shares
By Louise Ho |
April 19, 2012, Thursday
|
Online Edition
Online Edition
THE price to earnings ratio of newly listed shares is lower than last year, which analysts said is related to new initial public offering draft rules.
The average P/E ratio of the 11 new shares issued in April was 30.82, much lower than 52.09 in the same period last year, according to the latest statistics by Gildata.
In the first quarter, the average P/E ratio of 48 new shares listed in Shenzhen and Shanghai was 30.78, almost half of 62.35 in the first quarter last year.
To address the problem of high IPO prices, China's securities regulator proposed earlier this month that companies with P/E ratios of 25 percent higher than the industry average are required to disclose pricing information to investors.
Industry watchers said the new proposal has pushed down the P/E ratio of IPO prices this year, but independent analyst Pi Haizhou said on his blog on Monday that only time would tell if the proposal could lower IPO prices in the long term.
Guo Shuqing, the regulator's chairman, said on Tuesday "it is more appropriate that new shares have a P/E ratio at about 20."
On the same day, famous venture capitalist Zhao Danyang said in a letter to investors that he is going to buy some Chinese companies that are worth investing in while the stock market is in the doldrums.
The average P/E ratio of the 11 new shares issued in April was 30.82, much lower than 52.09 in the same period last year, according to the latest statistics by Gildata.
In the first quarter, the average P/E ratio of 48 new shares listed in Shenzhen and Shanghai was 30.78, almost half of 62.35 in the first quarter last year.
To address the problem of high IPO prices, China's securities regulator proposed earlier this month that companies with P/E ratios of 25 percent higher than the industry average are required to disclose pricing information to investors.
Industry watchers said the new proposal has pushed down the P/E ratio of IPO prices this year, but independent analyst Pi Haizhou said on his blog on Monday that only time would tell if the proposal could lower IPO prices in the long term.
Guo Shuqing, the regulator's chairman, said on Tuesday "it is more appropriate that new shares have a P/E ratio at about 20."
On the same day, famous venture capitalist Zhao Danyang said in a letter to investors that he is going to buy some Chinese companies that are worth investing in while the stock market is in the doldrums.
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