AN EMPIRICAL ANALYSIS ON A SHARE MARKET VALUATION BASED ON INTERNATIONAL VALUATION REGIME
基于国际估值准则的A股定价实证分析

Traditional finance theory argues that the value ofa stock is the discounted expected future cash flows over aninfinite time horizon, however, empirical analysis on world stockmarkets shows that the real prices are based on some mid-termfundamental factors such as market expectations on earning growthwithin a year or two. China's stock market has experienced greatfluctuations over the past three years, which caused widely debateon whether it was over or under valued. We reply to these debates bydeveloping a relative valuation model which gives estimated indexprices under international stock market's valuation regime and findthat the market price has changed from over-valuation in 2007 to anrelatively reasonable level in 2008.The model can also be extendedto evaluate individual stocks. Implications of the empirical resultsand some suggestions are provided.