A Top-Down Look at the Chinese Equity Market

Bridgewater

Bob Prince, Erin Miles

1 Pages

Bridgewater Associates examines China’s equity market from revenues through valuations, comparing its fundamentals with the US and Europe. Chinese corporate earnings grew faster over the prior decade, while a domestically focused revenue base and evolving investor mix make the market structurally distinct.

Key Takeaways

Domestic Revenue Exposure: Chinese A share companies generate 86% of revenues domestically, versus foreign revenue exposure of 29% for US companies and 45% for European companies.
Faster Earnings Growth: Chinese earnings per share growth was roughly double the US over the prior decade, supported by nominal GDP growth nearly 4 times higher since 2005.
Less Financial Engineering: Since 2005, financial engineering boosted US EPS by 40%, compared with about 5% in China and 25% in Europe.
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