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On China's stock market.

"According to The Economist's 'Bubble guide,' China's recent share-price boom is still relatively modest compared with the giants of history. The chart plots the performance of Chinese share prices over the past five years against the three great bubbles of the 20th century: Wall Street in the 1920s, Japan in the 1980s and America's NASDAQ in the 1990s. The NASDAQ composite index saw a gain of more than 500 percent from 1995 to early 2000. Japan's Nikkei 225 jumped by 300 percent from 1984 to 1989. The Shanghai A-share index, having recovered most of its plunge in late May, shows a gain of about only 160 percent over the past five years."

"Moreover, Chinese A-shares now have an average price-earnings (p/e) ratio of around 45. At their peaks, the average p/e ratio of the Nikkei 225 in 1989 and the NASDAQ at the start of 2000 were both well over 100. This suggests that Chinese share prices could have much further to climb before the bubble bursts."

--The Economist, June 23
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Title Annotation:China
Author:Rees, Matthew
Publication:The International Economy
Date:Jun 22, 2007
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