The P/E ratio should be linked to the ownership structure. The P/E ratio is also related to the ownership structure. If the shares are fully circulated, the P/E ratio will be lower; If the shares are not fully circulated, the P/E ratio of the tradable shares will be higher. The reason is that if the total value of listed companies remains unchanged and shares are divided into tradable shares and non-tradable shares, the liquidity of assets will increase the value of assets (liquidity premium). Generally speaking, the price per share of tradable shares is naturally higher than that of non-tradable shares. The lower the price of non-tradable shares, the higher the price of tradable shares, and the result is that the average price-earnings ratio of tradable shares is higher than that of non-tradable shares. The smaller the proportion of tradable shares in China's share capital, the larger the price difference between tradable shares and non-tradable shares, and the higher the average P/E ratio of tradable shares.

At present, in the China market, non-tradable shares account for two-thirds of the total share capital, so it is normal that the P/E ratio is higher when the tradable shares are not in circulation.

P/E ratio is an important index to analyze the securities market. However, due to its simplicity, intuition and incompleteness, improper use can easily lead to misunderstanding, thus affecting the correct understanding of the securities market. In view of this, this paper analyzes the P/E ratio and related stock market bubbles.

P/E ratio, also known as stock earnings ratio or P/E ratio, is the ratio of stock market price to its earnings per share. The calculation formula is:

P/E ratio: current market price per share/after-tax profit per share.

P/E ratio is an important index to measure stock price and enterprise profitability. Because the price-earnings ratio combines the stock price with the profitability of the enterprise, its level reflects the stock price more truly. There are many factors that affect the overall P/E ratio of a market, among which the two most important ones are the economic development potential and market interest rate level in the region where the market is located. Generally speaking, listed companies in emerging securities markets generally have good development potential and high profit growth rate. Therefore, the overall P/E ratio of emerging securities markets will be higher than that of mature securities markets. The price-earnings ratio of developed countries such as Europe and America is generally maintained at 15 ~ 20 times. The normal price-earnings ratio of some developing countries in Asia is about 30 times. On the other hand, the reciprocal of P/E ratio is equivalent to the expected rate of return of stock market investment. Therefore, due to the pursuit of average rate of return by social funds, the reasonable P/E ratio of a country's securities market also has a reciprocal relationship with its market interest rate.