English

By Tang Guhan

Chinese experts believed that China's A shares were undervalued at present, as reported by the Xinhua News Agency on Wednesday.

Chinese stock market has plummeted since the second half of June. The Shanghai (Securities) composite index, for instance, was down from 3,021.9 points on June 15 to 2,786.89 points on July 3.

Zhong Wei, the director of the Financial Research Center from Beijing Normal University, noted that the Shanghai Stock Market was only 15 times the price to earnings ratio (P/E Ratio), which indicates a low valuation as a whole.

The stock prices for specific industries were undervalued, Zhong added, for instance, the banking and insurance companies' P/E ratio was below 10 times, which indicated investing opportunities for institutional investors. Especially, blue-chip stocks were rather cheap when compared with foreign ones.

The inclusion of A shares into the MSCI indexes will further facilitate the liquidity of the A shares market. Chinese stocks are integrating into the global arena at a rapid pace.

The foreign exchange market has also seen fluctuations recently. "The recent RMB's depreciation was due to multiple reasons. One of which was an adjustment from a previous appreciation and another was coming from external factors," Zhong said.

"The exchange rate was determined by the market demands and fluctuations which are normal in this case," Zhong noted, "but the mechanisms stayed unchanged."

Experts projected that China's gross domestic product (GDP) could continue to achieve a 6.8 percent increase in 2018. The earnings for the A shares companies will likely reach a 10 percent growth rate this year.

China is seeking a new growth impetus other than infrastructure and property constructions.