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Beijing, Jan 2 : The market capitalisation of China’s two stock exchanges at Shanghai and Shenzhen accounted for nearly half the Communist country’s gross domestic product (GDP) in 2006.
Information released by the Shanghai and Shenzhen securities exchanges shows that in 2006, stock trading volume in these exchanges broke the 9-trillion yuan mark to reach $1.15 trillion in total, or 186.22% more than the last year.
The two stock markets raised a record 220.44 billion yuan ($27.90 billion) of funds in total. By December 29, total market capitalisation in Shanghai and Shenzhen stock exchanges reached 8.94 trillion yuan, or 175.68% more than the last year, and accounted for 49.62 % of the GDP figure, the China Securities Journal reported.
The Shanghai & Shenzhen 300 index rose 121% this year, the largest rising rate in all global stock markets.
However, back in India, the market capitalisation-to-GDP ratio surpassed the 100%-mark when the 30-share Sensex of the BSE crossed the 13,000-level for the first time on October 30, 2006. India’s GDP at factor cost for the year 2005-06 was pegged at Rs 33 lakh crore, while on January 2, 2006, the BSE’s market capitalisation stood at Rs 36.59 lakh crore.
At present, the average P/E ratio for the Shanghai stock market is 33.3, and the average P/E ratio for Shenzhen stock market is 32.72. The two stock exchanges have 1,421 listed companies with an aggregate of 1,507 listed shares.
In India, the trailing price-to-earnings ratio is about 20 times FY06 earnings compared with other markets, where it is about 13 times the earnings. The P/E ratio is much above the 15-year median of 16 times. However, analysts say the market capitalisation-to-GDP ratio must be seen in the backdrop of India’s parallel economy, which is as big as the reported GDP.
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