Although the Shanghai and Shenzhen stock exchanges closed slightly down on June 30, the last trading day of the first half of the year, they stand out among the major global stock markets with growth rates of 62.53 percent and 78.35 percent respectively. However, some analysts have reminded investors to remain alert to the rise of price/earnings ratio
(P/E ratio).

On June 30, the Shanghai Composite Index closed at 2959.36 points, up by 62.53 percent compared to 1820.21 points at the end of last year. The Shenzhen Component Index closed at 11566.61 points, up by 78.35 percent over a six-month period. During the same period, the American Dow Jones Index fell by 2.81 percent and British FTSE Index fell by 3.16 percent, while the Nikkei Index saw a rise of just 12.4 percent.

On June 30, the total market value of shares listed on the Shanghai and Shenzhen Stock Exchanges reached 20.144806 trillion yuan. This marks a recovery to over 20,000 billion yuan after a one-year downturn. Compared to figures six months ago, the total market value of shares listed on the two markets has risen by 67 percent and the circulation market value has doubled.

At the same time, trade volume on the Shanghai and Shenzhen Stock Exchanges also increased significantly. On June 30, the total turnover on the two markets reached 210.66 billion yuan, while the total turnover on December 31, the last trading day of 2008, only amounted to 57.006 billion yuan.

Since last year, additional shares for refinancing have frequently been offered privately on the A-share stock market. Following the reopening of the IPO on June 29, the direct financing function of the A-share stock market has been fully restored.

However, the rise of stock price evaluations has been more rapid than that of the Index. On July 1, the average P/E ratio of the Shanghai stock market was 25.3 times, while that at the end of last year was only 14.85 times; the average P/E ratio of the Shenzhen stock market was 35.2 times, while that at the end of last year it was only 16.72 times.