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Stocks rise as hope for a rebound takes hold
By Ye Zhen |
September 29, 2012, Saturday
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Print Edition
Print Edition
SHANGHAI stocks gained in the last trading day of the month yesterday on speculation the market may rebound as a report by the Shanghai Stock Exchange said China's stock market valuation is at a record low.
The key Shanghai Composite Index rose 1.45 percent to 2,086.17 points yesterday and gained 2.96 percent for the week. The index increased 1.91 percent this month to snap a four-month losing streak.
The market valuation of blue chips has sunk to the lowest level in history and shareholders are likely to have higher returns compared to bonds, the Financial Innovation Laboratory with the Shanghai Stock Exchange said in a report.
The Shanghai Composite Index is valued at 10.3 times estimated earnings, compared with 14.19 times for the S&P 500 that tracks US stocks, 12.6 times for the FTSE 100, the benchmark index of the London Stock Exchange, and 35.68 time for Japan's Nikkei index, according to the report.
"History shows that a low market valuation tends to be followed by a considerable rebound," said Liu Ti, director of the laboratory.
Hua Sheng, president of Yanjing Overseas Chinese University, said "an expected pickup in the nation's real economy in the fourth quarter will also give a boost to the stock market, especially when its valuation has reached an all-time low."
Market confidence also improved after the China Securities Regulatory Commission said it is studying a plan to lower the tax rate on cash dividends.
Gold stocks in Shanghai gained after gold futures for December delivery rose 1.5 percent to a seven-month high in New York.
The key Shanghai Composite Index rose 1.45 percent to 2,086.17 points yesterday and gained 2.96 percent for the week. The index increased 1.91 percent this month to snap a four-month losing streak.
The market valuation of blue chips has sunk to the lowest level in history and shareholders are likely to have higher returns compared to bonds, the Financial Innovation Laboratory with the Shanghai Stock Exchange said in a report.
The Shanghai Composite Index is valued at 10.3 times estimated earnings, compared with 14.19 times for the S&P 500 that tracks US stocks, 12.6 times for the FTSE 100, the benchmark index of the London Stock Exchange, and 35.68 time for Japan's Nikkei index, according to the report.
"History shows that a low market valuation tends to be followed by a considerable rebound," said Liu Ti, director of the laboratory.
Hua Sheng, president of Yanjing Overseas Chinese University, said "an expected pickup in the nation's real economy in the fourth quarter will also give a boost to the stock market, especially when its valuation has reached an all-time low."
Market confidence also improved after the China Securities Regulatory Commission said it is studying a plan to lower the tax rate on cash dividends.
Gold stocks in Shanghai gained after gold futures for December delivery rose 1.5 percent to a seven-month high in New York.
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