Still, comparing large-cap China ETFs to their Internet peers is not apples-to-apples. FXI, as just one example, holds just 26 stocks and is dominated by state-run firms, banks in particular. The financial services sector, one of the most loathed corners of Chinese equity markets over the past year, is 55.4% of FXI’s weight.
FXI and comparable China funds offer little leverage to the consumer/Internet story that investors prize and one they have been willing to assign high multiples to.
Even with that, Chinese Internet stocks are not as richly valued as their U.S. peers. CQQQ has a P/E ratio of 15.5, which is below the 18.6 found on the PowerShares QQQ (NasdaqGS: QQQ).
Guggenheim China Technology ETF
Tom Lydon’s clients own shares of QQQ.