For investors who can stomach the additional risk, Andrew Wang, managing partner at Runnymede Capital Management, recommends buying iShares MSCI China ETF (MCHI). The ETF has about 150 stocks and charges a 0.64% annual expense ratio. The largest are holdings are Tencent Holdings, the world's fifth-largest internet name by revenue; Alibaba Group, China’s Amazon; and China Construction Bank, one of the world’s largest companies with more than 329,000 employees.
“China stocks have considerable pessimism discounted into valuations and are worth considering,” said Wang. “Looking at market indices, China's market has a cyclically adjusted price-to-earnings, CAPE, ratio of 15.4 and P/E of 7.4 compared to the United States at 28 and 22.4, respectively.”
Runnymede currently has a position in iShares MSCI China ETF.
“In May, Berkshire Hathaway's Charlie Munger said, ‘I do think the Chinese stock market is cheaper than the American stock market. And I do think China has a bright future.”
“China India flag graphic via shutterstock.com” by Asitimes is licensed under CC BY 2.0
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