It is a territory of China, giving it an enviable gateway to the world’s second-largest economy and one of a member of the dwindling AAA sovereign credit rating club. Hong Kong is also home to an equity market that is trading at its highest levels in three years.

The Hang Seng traded slightly lower during Friday’s Asian session, but up 7% in the past three months, Hong Kong’s benchmark index is deserving of a small respite. After all, that surge has helped make Hong Kong ETFs, a pair of which are usually overlooked, high fliers.

Over the past 90 days, the $2.3 billion iShares MSCI Hong Kong ETF (NYSEArca: EWH) is up 5%. Sure, there are other single-country ETFs that have been better over that period than EWH, but the largest Hong Kong ETF is now flirting with $22, a price it has not closed above since December 2007. [Hong Kong ETFs Could Surge]

EWH has lagged other international ETFs because the Hang Seng cratered in March amid fears of slowing growth in China. A more sanguine outlook regarding Chinese economic growth, talk of added stimulus measures from Beijing and compelling valuations – both on the mainland and in Hong Kong – have bolstered EWH and its rivals.

“The Hang Seng Index is currently trading 9.8 times forward earnings, a common valuation measurement, making it far cheaper than 16.7 times on the S&P 500 and 17.8 times for Japan’s Nikkei,” according to the Wall Street Journal.

That means Hang Seng stocks are also less expensive the MSCI Emerging Markets Index. Financials and industrials, over 69% of EWH’s combined weight, are among the more discounted sectors.

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