China ETF investors should take not as the financials sector makes up a significant portion of the related fund products. For instance, financials make up 47.1% of FXI, 28.8% of GXC and 37.6% of MCHI.
Nevertheless, this has not deterred investors as many are looking at the cheap discounts in Chinese company shares listed in Hong Kong. According to the Hang Seng China AH Premium Index, stocks on the Hong Kong bourse are trading at a 32.89% discount to mainland markets. In comparing valuations, the db X-trackers Harvest CSI 300 China A-Shares Fund (NYSEArca: ASHR), which tracks mainland Chinese A-shares, is showing a 14.4 P/E ratio. [Surprising Drivers of the A-Shares ETF Surge]
“Sometimes it happens in the last leg of a rally where people don’t look at fundamentals,” Rahul Chadha, co-chief investment officer at Mirae Asset Global Investments of China equities, said in the WSJ article. “If you chase momentum, it can hurt very badly.”
iShares China Large-Cap ETF
For more information on China, visit our China category.
Max Chen contributed to this article.