Despite the coronavirus shaking up Chinese stocks, one market expert said there’s actually hidden value in large-cap Chinese names.
Chantico Global CEO Gina Sanchez said that while the coronavirus outbreak could further slow growth in China, as was the case with the SARS outbreak, the FXI China Large-Cap ETF is worth a second look by investors.
“Remember that the FXI [is made up of] large-cap companies, and they’ve actually been more affected by trade talks,” she said Thursday on CNBC’s “Trading Nation.” “So the signing of a phase one trade deal, while it does ensure that we have tariffs, it provides some certainty.”
Given that the tariffs also actually ended up hitting small-cap Chinese stocks more than their large-cap counterparts, Sanchez said there is “probably value” that will be “trapped for a period of time” as the market determines the true impact of the coronavirus.
Ascent Wealth Partners’ Todd Gordon, however, said the technical picture of FXI, which carries Tencent as its largest holding, bodes ill. Most notably, the stock has been trading in a consolidation that Gordon said straddles the $50 to $55 range.
“I think there are other places to place your capital that are moving much more sharply than this chart that is extremely range-bound,” he said in the same “Trading Nation” interview.
Gordon is specifically eyeing the $52.50 level. If FXI can break above that price, Gordon said, investors could start possibly looking at the ETF.
FXI is down almost 3% this year.