China Tech Stocks Might Be Resilient in U.S.-Led Swoon
(Bloomberg Gadfly) -- The sell-off in U.S. technology shares has investors watching their Chinese counterparts to see if this tsunami crosses the Pacific.
Valuations suggest otherwise. Comparing U.S.-listed Chinese companies with American companies tells the tale.
Using the Bloomberg Industry Classification System, we can see that separate groupings of technology and communications stocks in China are trading at price-earnings ratios far below those of U.S. firms. In the consumer discretionary groups, which contain Amazon.com Inc. and Alibaba Group Holdings Ltd. respectively, the Chinese companies are pricier.
The caveat here is that this category also includes the likes of U.S. clothing maker Lands' End Inc. (with a P/E of 719) and Chinese fintech company Fincera Inc. (P/E: 1,930).
Spinning forward to look at blended 12-month earnings estimates, valuations appear far more reasonable, though the U.S. group remains more expensive.
I consider both baskets of technology stocks a little bubbly, but don't be surprised if Chinese shares remain more resilient in the current swoon.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
Tim Culpan is a technology columnist for Bloomberg Gadfly. He previously covered technology for Bloomberg News.
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