Chinese stocks are now trading at a 20% to 30% premium above competitors in the United States and the European Union, even though expected corporate earnings growth is actually about the same, say McKinsey consultants. In short, the market shows signs of being overheated.
The premium gap is even bigger in certain industries. China’s industrial companies are trading at a 38% higher premium than those in the United States and consumer goods companies enjoy a 58% advantage.
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