U.S. investors have benefited significantly from strong stock market performance by tech firms over the last several years. Tech now constitutes a major, major part of many investors’ portfolios. That said, U.S. tech names are also very expensive – so much so that some investors may now be looking for opportunities elsewhere. Recent news for China’s Baidu (BIDU) should remind investors that despite the narratives, China tech offers some real opportunities – and at an appealing cost.
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BIDU recently saw its stock price surge thanks to excitement around its autonomous vehicles. The Chinese government signaled that it would step up policy support for its Apollo Go autonomous vehicle program. The step forward for the vehicles, set to be used as taxis, would see Baidu leap ahead of names like Tesla (TSLA) in miles driven autonomously.
It has done so while charging far less than TSLA. BIDU currently costs $101 compared to $245 for TSLA, according to YCharts. BIDU also has a much, much smaller price-to-earnings (P/e) ratio. BIDU’s P/e ratio sits at 13.36 compared to TSLA’s 62.15.
While those factors aren’t everything, and TSLA has done well over the last several years relative to BIDU, in autonomous vehicles, BIDU may have the upper hand. The China tech firm can now reasonably claim to have surpassed TSLA in terms of miles driven autonomously.
That speaks, too, to the overall case for China tech investing. The nation’s consumer economy may be facing challenges as consumer spending remains limited and the debt crisis lingers. However, its tech firms remain global competitors that also diversify away from expensive, top-heavy U.S. tech.
The KraneShares CSI China Internet ETF (KWEB ) provides one solid option to get China tech exposure. KWEB holds BIDU in its top holdings and charges 69 basis points (bps) for its approach. For those investors looking to diversify their tech allocation, looking to names like BIDU could make sense.
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