“Internet companies on Chinese exchanges now trade at a median 89 times estimated 12-month earnings, versus 25 times for global peers,” according to data compiled by Bloomberg.

That a time when the broader A-shares market is trading at its highest premium to Hong Kong in six years.

“Even more telling about the degree to which the A-share market is overheated may be the Hang Seng China AH Premium Index, which tracks the relative prices of 59 stocks that have both A- and H-share classes available.

Theoretically there should be little difference since institutional investors can arbitrage between the two markets, but in reality practical constraints have A-shares now trading at a 40% premium versus their H-Share counterparts, the largest since mid-2009,” according to AltaVista Research.

Frothy valuations are not preventing investors from piling into ASHS and CNXT. The two ETFs have a combined $212.5 million in assets of which over $82 million has come in this year.

Market Vectors ChinaAMC SME-ChiNext ETF

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