Charlie Munger says Chinese stock market cheaper than U.S.

Berkshire Hathaway's vice chairman Charlie Munger said here on Saturday that the Chinese stock market is cheaper than the U.S. stock market and the country has a bright future.

"I do think the Chinese stock market is cheaper than the American stock market, and I do think China has a bright future. I also think there will be growing pains of course," Munger said at Berkshire's annual shareholder meeting, often known as Woodstock for Capitalists, held at the CenturyLink Center in downtown Omaha of Nebraska.

The price-to-earnings (P/E) ratio of the U.S. stock market, a measure used to estimate the valuation of a stock market, is currently around 25, while the P/E ratio of Shanghai stock market stands around 16, according to analysts.

Munger said China's room for further economic growth will allow it to see a boom in investments going forward, but speculation may bring some trouble to the market.

"They're very bright people. They have a lot of action. Sure, they are going to be more speculative, but it's a dumb idea," he said.

While there're always some speculations and some value investors in the market, Warren Buffett, Berkshire Hathaway's chairman and chief executive, noted that developing markets tend to be more speculative than mature markets.

"Markets have a casino characteristic that has a lot of appeal to people, particularly when they see people getting rich around them," Buffett said.

"Those who haven't been through cycles before are probably a little more prone to speculate than people who have experienced the outcome of wild speculations," he argued.

Around 40,000 investors around the world over the weekend came to Omaha to attend Berkshire's annual meeting. The main focus of the meeting is the question-and-answer session, during which Buffett and Munger take questions from financial journalists, analysts and shareholders, ranging from Berkshire's business, the stock market, the economic outlook to the investment philosophy. Endite