China's Stock Market Price-earnings Ratio Empirical Research

The P/E ratio is one of the most important indexes in the basic analysis of stock market. It's often used to measure the investment value of stocks. How to evaluate it is meaningful and important. It's not only an important foundation of the financial supervision and administration department to constitute a reasonable regulating and controlling measure, but also can help the vast number of investors to be aware of the market risk and select suitable investment tactics. For a long time, the research on it is not deep and overall, but always stops on simple comparison of absolute numerical value, especially lack of substantial research. The theorists and negotiable securities circles disagree with each other. That was influenced the securities administrators and the investors to make right judgement.The purpose of this thesis is to analyze the change characteristcs of the P/E ratio as a whole in China, try to find out the structure differences of it, and research all kind of elements which may influence it. We use plenty of accurate dates in our substantial levels and give them international comparisons. According to its high and low ratio, advantages and disadvantages, we put forward a proposal of policy.The thesis is divided into four parts, which are illustrated as follows:The first part: Briefly introduces the definition and connotation of the P/E ratio, infers the factors that influence it with discount cash model. Compare with three calculating ways of the average P/E ratio. Make choices according to the real situation of China's stock market.The second part: Analyze and research such things: The historic rules of China stock market P/E ratio; the related characteristics of it between Shanghai and Shenzhen stock market; the related characteristics between the P/E ratio and the composite index; classify the structures according to the public company's manage achievements, professional attribute and the circulative capital stock model; research the P/E ratio of different stocks in different period. Compare the P/E ratio character and its changing laws in No.1 and No.2 grade stock market and stocks market for A shares and B shares which are artificially separated.The third part: Probe into the factors that influence China stocks market P/E ratio and its degree, such as the bank interest rate level, the macroeconomic increasing rate, the public company's profit increasing rate, the stock interest assigning rate, the stock market supply and demand relations, and so on.The fourth part: appraise the true level of China stock market P/E ratio according to the analysis of its relative economic index. Give composite comparison in the depth and the cross of it. Find out the systematic and technological causes that make the P/E ratio higher. Analyze the advantages and disadvantages of it and give suggestions to decrease it.