Investors have heard it plenty of times over the past two years. That being how inexpensive emerging markets stocks and exchange traded funds are compared to their developed market counterparts. But in the case of a major group of Chinese stocks, these shares are among the least expensive anywhere in the world.
Over 260 U.S.-listed ETFs feature some exposure to China with marquee names including the iShares China Large-Cap ETF (NYSEArca: FXI), which is the largest China-related ETF that tracks Chinese companies listed on the Hong Kong stock exchange. H-shares, or the Chinese stocks trading in Hong Kong are some of the least expensive stocks in the world and FXI has a price-to-earnings ratio below that of the MSCI Emerging Markets Index. [Cheap EM ETFs]
However, for now, many investors are cutting their losses as outflows from emerging markets ETFs continue at a blistering pace. Developing world equities have to contend with plunging currencies, slack commodities demand and stumbling stocks in China, the largest emerging market. [Emerging Markets ETFs Keep Bleeding Assets]
The Hang Seng, Hong Kong’s benchmark equity gauge, “now trades at 6.9 times earnings, lower than every benchmark index apart from Zambia, the southern African country facing a economic crisis, and Laos, which only has four listed equities. The Hang Seng China gauge is valued at the biggest discount versus the MSCI All-Country World Index since 2003, according to data compiled by Bloomberg.
Interestingly, A-shares, the stocks that trade on mainland China, are pricey by comparison with a P/E ratio north of 18. That means A-shares trade at a richer multiple than the S&P 500.