P/E Ratios: Nasdaq vs China / Bespoke

http://bespokeinvest.typepad.com/bespoke/2007/08/pe-ratios-nasda.html

It´s all about liquidity........We can see the opposite effect from liquidity in the worldwide credit markets.

And it doesn´t help when the central bank is offering deposit rates that are lower than the inflation rate..... At least they try to ease the pressure and now want to open the gates to investments in Hong Kong.

> Just to clarify : a red quote in China represents rising prices.

In the past we have made comparisons between the p/e ratios of the Nasdaq Composite and China's Shanghai Composite. Up until mid-July when US equity markets peaked, the price to earnings ratios on the two indices were very similar, and the argument could be made that even though China's stock market was rapidly increasing, its valuation - while high - was still inline the Nasdaq's.

Since mid-July, however, the two p/e ratios have diverged dramatically as the prices on the two indices have moved in opposite directions. The trailing 12-month p/e ratio on the Nasdaq is now 35.88 while the p/e on the Shanghai Composite is now 49.57.

> But probably still better value than a Washington Mutual with a forward p/e ratio of 10.... :-)