Did the Chinese stock bubble just burst?

Is it 1982 in China or 1999? A secular bull market getting underway after a tough 7 year bear or merely a credit-fueled boom on the verge of a bust.

Shanghai’s A shares market has just corrected by 13% over the last week, one of the biggest pullbacks for Chinese stocks on record. Is this a buyable pullback in a longer-term uptrend or the beginning of the end.

I don’t know the answers to these questions, nor will anyone until after the fact.

But it’s probably smart to consult some valuation metrics relative to historical norms before we pass judgement based on anecdotes from a bubble-happy press that seems to regard anyone making money anywhere as being either lucky or reckless.

Goldman Sachs looks at four popular valuation metrics to gauge where Chinese stocks are trading now in the charts below. Click on the image to embiggen:

Screen Shot 2015-06-19 at 9.43.23 AM

Source:

China Weekly Kickstart
Goldman Sachs – June 19th 2015

 

 

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