Research Of Stock Market Bubble In China Based On Per

The Chinese stock market, which started in the 1980s, entered a rapid development period in the 1990s. The period of development of the Chinese stock market is shorter than that of the Western developed countries. The achievements are great during the short 20 years, but there are also quite a few issues. As the non-tradable shares'problem gradually resolved, More and more people became shareholders. It is necessary to make an objective, scientific, calm analysis of the healthiness of current stock market and to judge whether there is serious stock market bubble under this circumstance.The commonly used indicator for measuring the size of the stock market bubble is the ratio of the real market price per share to earnings per share, namely, Price-Earnings ratio(PER). PER is equal to the real market price per share divided by earning per share, PER can reflect the difference between the market price and the profits directly. Besides, it is an important indicator to judge whether the stock price is reasonable and the stock market bubble as well. Both of the two stock exchanges in Shanghai and Shenzhen are not calculate the PER of each stock. They get an average PER through the total market value being divided by the total earnings. Judging the bubble of stock market by PER, it is crucial to determine a reasonable PER. When the actual PER exceeds the reasonable one, it is regarded as there is a "bubble".Based on the development of China's current economic situation, derived the formula for calculating a reasonable price-earnings ratio, and then using the current data on the actual price-earnings ratio when the stock market bubble in China's test, that China's bubble does exist, but there is a rational bubble And there is no speculative bubble, the last of the healthy development of China's stock market raised their own proposals.