The number of listed firms with a price-to-earnings (P/E) ratio above 40 times has fallen from 180 to 152 in the wake of last year's stunning earnings, says Chanitr Charnchainarong, president of the Market for Alternative Investment.
Nonetheless, to prevent stock speculation amid the market bull run and brisk trade volume, the Stock Exchange of Thailand since January has asked brokerages to keep an eye out for possible speculative activity in stocks with a P/E ratio of 40 times or more.
The P/E looks at the relationship between a stock's price and the underlying company's earnings. A high P/E ratio is an indication of overvaluation.
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