As mentioned previously, China’s world-beating equity rally is the gift that keeps on giving, and not just for those who are riding the inexorable, margin-fueled rally. The mania also provides quite a bit of comic relief for those of us who are, on a daily basis, inundated with hundreds of depressingly absurd Greek soundbites and hoplessly clueless central banker ruminations.
Valuations have skyrocketed in China, with the median PE on the Shenzhen sitting at a cool 108X, which looks impressive until you consider that the ChiNext trades at 133X. The siren song is in fact so alluring that some US-listed Chinese tech firms are repatriating because they feel they aren’t getting the valuations they 'deserve.'
“American investors don't understand the business model," one Chinese tech executive recently told Reuters.
One business model that’s easy to understand is that of Hong Kong-listed Jicheng Umbrella Holdings Limited. As you might have guessed from the name, the company designs, researches, manufactures and sells plastic umbrellas. That’s really all you need to know to appreciate the following chart which shows that shares have risen some 2,700% since February 13 (also note the annualized figure)...
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