China Stock Market Valuations and Expected Future Returns

Country: China (updated daily) check out Global Overview for detailed methodology.

Ratio of total market cap over GDP: Maximum - 662%; Minimum - 41%; current - 44%
Expected future annual return: 30.4%

ETF Used for dividend yield: MCHI (Yield=1.1%)
Market Index used: Shanghai Composite Index
Current Annual GDP: $13,144 billion US dollars or 81,892 in billions of national currency (GDP in Local Current Prices Annual Growth=12.73%)
Data since year 1990

China Historical GDP Growth

Historical GDP of China in billions of national currency. The GDP in local current prices has grown at the annual rate of 12.73% over the past 8 years. Please note this growth rate includes the effect of price inflation and it is NOT the real GDP growth rate. Current Annual GDP: $13,144 billion US dollars or 81,892 in billions of national currency.

Historical Stock Market Cap

Historical total market of China in billions of national currency. This value is normalized using the data published by WorldBank. Shanghai Composite Index is used for the normalization. It is an index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange.

Historical Ratio of Total Market Cap over GDP (%)

The current ratio of total market cap over GDP for China is 44%. The historical high was 662%; the historical low was 41%. If we assume that the ratio will reverse to the historical mean of 150% over the next 8 years, the contribution to expected annual return is 16.59%. This is the detailed historical chart of the ratio.

Conclusion

The stock market of China is expected to return 30.4% a year for the coming years. This is from the contribution of economic growth in local current prices: 12.73%, Dividend Yield: 1.1% and valuation reverse to the mean 16.59%.

This is the projected return of the stock market in China relative to other countries. Click on each bar in the chart to go to other countries:


You can go here to see what international stocks Gurus are buying.