The P/E Level And Affecting Factors On China Stock Market

This paper focuses on the level of price earning ratio (PE)in China's stock market as well as the affecting factors.P/E ratio reflects the relationship between the profitability of listed companies and the stock price. The essence of the ratio is to evaluate the payback period of one share under a certain level of corporate profits , which is of used as a measure of valuation and risk level indicators.We have explored deeply in the general level of price earning ratio of China stock market in our paper. We adopted the calculation method of P/E from China Securities Regulatory Commission to classify and compare P/E of China stock market.Closely connected with China unique dual market structure , we have gotten eight categories according to whether total share or circulating share, whether total sample or sample with positive earnings and whether static or dynamic. Then we compared the P/E difference by different trend plot.Meantime, we showed the statistic property of the static and dynamic P/E in several statistic variables, such as Mean, Mediam, Skew degree and distribution property between those categories.So that we can explore the real P/E regulation hidden behind the statistic data.In the last part of our paper, we aimed to the factors which affect P/E ratio. Before our formal analysis, we summarized the basic micro factors which affect P/E factors. In this paper, we paid heavily attention to how the macro factors, such as GDP, GDP growth ratio, interest rate, inflation rate, exchange rate and the Foreign Exchange Reserves growth rate, affect China P/E.In order to clearly lay out our empirical results from this paper, we summed up China P/E properties and brought forward several straightforward advices.