The Empirical Research On The Alteration Of The PE Ratio Assessment For The Industries On The A Share Market

Compared with the A share market before2009, the liquidity ratio of the A sharemarket right now is becoming bigger, and the A share market has entered into the period offull circulation. During the recent50years, the phenomenon of IPO of public companiesand the unlocking of the non-tradable share and restricted shares, have caused that thescale of the A share market has greatly expanded about10times. And the circulation’sbeing expanding and the inelastic currency have both caused the status of the A sharemarket’s being adjusting. So when the full circulating A share market is generally facingthe new industrial transformation, when most traditional industries are certainly confrontedwith the huge risk of excess production capacity, and the majority of industries havealready terminated the peak of their own, the PE ratio between different industries willregularly bring about obvious divergence phenomenon in front of the gloomy industryprospect and the anticipation of the investors for their investment income. The environmentof A share market, the scale of which has greatly expanded for about10times, willcertainly be bound to change the original cognition to the PE ratio evaluation during theun-full circulated period. At present, the new environment of A share market will generallydamage the balance of the PE ratios between different industries and disparate publiccompanies, therefore, the span-new transformation features must come into being duringthe new environment of A share market.Focus on the angle of the development and change of the A share market environment,combining with the status quo of industrial transformation, this paper has particularlyproved the relevant research on the PE ratio level of different index, different markets anddifferent industries, analyzing the change of distribution features between the differentaspects above, in order to fully test and verify the PE ratio assessment level of differentindex, different markets and different industries. In the next step, the distinguish of growthbetween traditional obsolescent industries and newly rising industries on A share marketwill, of course, be fully analysed, which has been caused by the factors given above.Consequently, this paper will, in detail, elaborate the feature of market polarization and the phenomenon of assessment divergence formed in the course of industrial transformationafter the A share market has greatly changed.By means of various analysis, furthermore, this paper has ulteriorly verified themultiple variable factors which can affect the change of PE ratio. And the majorconclusions are as follows: First, the difference of the level of different index’s PE ratio isvery huge, and the level of PE ratio is interrelated with the feature of the type of theindustry group covered. The different group covered will result in so different index PEratio. The PE ratios of different index are not only relative, but also have kept some certainindependence characteristic. Next, the industry factor is the key to the obvious differenceof different markets’ PE ratio level, the industry growth covered in each market is the keyof the key. Thirdly, the co-movement of changing of the PE ratio’s level between differentindustries has been not obvious, different industries have obviously demonstrated notablepolarization, the structure of PE ratio has gradually emerged the feature of multilevelregion distribution. Fourthly, as the common reference substance for investment adoptedby the investors in the past A share market, shanghai composite index’s effectiveness hasgenerally become more and more weakened, in the meanwhile, the co-movement betweenshanghai composite index and different industries are also of great difference. In a word,the huge assessment divergence of different industries, in essence, depends on the differentgrowth factors between different industries, and the phenomenon that the growing stock innew rising industries has been affected by the growth factors is still more striking. Inaddition, some obsolescent industries, affected by more market factors, generally havesome obvious market assessment effect. By contrast, the growing stocks in new risingindustries, drived by the growth, have authentically emerged distinct independenceassessment effect. The fundamental expect brought by the industry driving, the differenceof divergence of assessment between different industries, and the diversity ofco-movement between each industry and the market etc, have all completely brought aboutthe obvious phenomenon of independence assessment industry and market assessmentindustry, and particularly, the extent that each industry has been affected by independenceassessment effect and market assessment effect has been further widely different, this kindof industry assessment differentiation will greatly change the preference extent of the investors on A share market.