Chinese technology stocks are starting to look like a bargain after a regulation-driven selloff. And that could mean reduced flows into mega-cap U.S. tech -- or even outflows.
The Hang Seng Index has lost more than 20% since a mid-February peak thanks to concerns about the Evergrande default, a wider property bubble and regulatory crackdowns. Beijing’s desire to have tech companies list their shares domestically rather than in the U.S. has added pressure, as companies like Didi Global Inc. are pushed to delist from American stock exchanges and instead go public in Hong Kong.
As a result, valuations of Chinese companies are tumbling toward parity with the rest of the global technology industry, which you can see in today’s Chart of the Day.
China stocks have seen significant outflows, particularly in tech. The Nasdaq Golden Dragon Index, which holds American Depository Receipts of the Chinese tech companies listed in the U.S., has declined more than 50% since its February high. Meanwhile, the NYSE Fang+ Index -- which holds Chinese ADRs like Alibaba and Baidu as well as U.S. stalwarts Apple, Tesla and Nvidia -- has rallied 24% in the last 12 months.
