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

 

 

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web