Daybreak China is the new US. How to make the most of it as an investor
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Feb 23, 2026 A look at China’s market surge and why it has outperformed the US and India recently. Discussion of valuation gaps that make Chinese stocks appear cheaper than US peers. Practical barriers Indian investors face, including few mutual fund options and workarounds like LRS and ETFs. A review of the key Chinese companies shaping the market and the policy risks that keep valuations muted.
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China's Recent Rally With Lower Valuations
- Chinese markets have outperformed India and the US since Sept 2024, offering a strong rally with lower valuations.
- Hang Seng trades at ~13x trailing P/E versus Sensex 22x and S&P 500 28x, making China appear cheaper despite recent gains.
China's Bull Run Followed Years Of Structural Pain
- The 2021–2024 pain was severe but conditions eased by end-2024 with stimulus and pro-growth narratives.
- Despite the rebound, five-year returns remain negative, creating potential opportunity as valuations lag global peers.
Big Chinese Companies That Withstood Pressure
- Several Chinese giants like Baidu, SMIC, Alibaba, Tencent and BYD have either held ground or outperformed global peers.
- These firms form the Hang Seng Tech index alongside Meituan and Xiaomi, offering tech exposure at lower multiples.