Even though the Chinese stock market has been scrutinized extensively in the past couple of years, some investors have begun to realize that there is much more upside than apparent risk for Asia's powerhouse. China's technology sector has the lowest valuation in history compared to its American counterpart.
Measured through the KraneShares CSI China Internet ETF (NYSE: KWEB), names in this space now trade at steep discounts against peers like Alphabet Inc. and even Amazon.com Inc.. While discounted stocks might not look attractive to some investors based on their price action, others recognize the value to be had in them.
This is why stocks like Alibaba Group (NYSE: BABA), Baidu Inc. (NASDAQ: BIDU), and the overall iShares MSCI China ETF (NASDAQ: MCHI) have delivered shareholders a significant rally this week, one of the best performances since the few months after the COVID-19 pandemic. Retail investors can also feel a bit safer because some of Wall Street's favorite investors have also given these companies a chance to make billions.
Chinese Government Interventions Improve the Risk-Reward Balance for Investors
Recently, the Federal Reserve (the Fed) in the United States decided to lower interest rates by half a percent, or 50 basis points. The Chinese economy has been criticized long enough for its slowdown and contractions, so the government has also decided to cut rates by the same amount.
The difference is that the Chinese ETF trades at only ...
