For example, the Global X China Financials ETF (NYSEArca: CHIX), which provides broad exposure to companies in the Chinese financials sector, trades at a 7.7 price-to-earnings and a 0.9 price-to-book. In comparison, the S&P Financial Select Sector Index, which is comprised of S&P 500 financial companies, are trading at a 12.5 P/E and a 1.4 P/B.
“Valuations are even more favorable among Chinese banks, where fears of widespread instability in the banking system have so far failed to materialize,” Engel added.
ETF investors can also gain a more diversified exposure to Chinese markets through broad China country-specific ETFs, which also include heavy tilts toward state-owned banks and the financial sector. For example, the SPDR S&P China ETF (NYSEArca: GXC) includes a large 22.9% tilt toward financials and the iShares China Large-Cap ETF (NYSEArca: FXI) holds 46.6% in financials. Both of the funds include names like China Construction Bank, Industrial and Commercial Bank of China, and Ping An Insurance, among others, in their top holdings.
For more information on the Chinese markets, visit our China category.