Don't fret over high PE numbers, says Greifeld
Chinese regulators and investors should be more concerned about issues like market transparency and fairness rather than worry too much over the high price-to-earnings (PE) ratios of ChiNext, China's NASDAQ-style second board, according to NASDAQ Chief Executive Officer Robert Greifeld.
"In a high PE scenario, the expectations are high on the company's growth rate as well as the management's ability to sustain it. When that expectations falter, we see high volatility in the stock price," Greifeld said in an interview in Beijing on Thursday.
The first batch of 28 firms, which debuted on Friday at the Shenzhen Stock Exchange, had priced their IPOs nearly 56 times over 2008 earnings. The much-disputed sky-high valuations of start-ups on China's NASDAQ-style board also raised concerns that excessive speculation will hobble the fledging market.
