submarino

Why It's Not Too Late to Short China

Despite the 30% selloff, A-share valuations
remain expensive at 32x historical P/E and 5.9x P/BV.
Consensus’ 25% 2008-09 EPS growth expectation is
unrealistic amid global stagflation risks.
What is worse, A shares still trade at roughly a 70% premium to
H shares, which implies further downside for large-cap
financial and property stocks in both markets.
Considering domestic inflationary pressure and the rate
environment, until A shares come down to trade at
around 20x P/E, the market might not find too much
support.