Top Analyst: China Tech ETF May Beat U.S. Best Giants Soon

New York – A fresh wave of investor attention is shifting to Chinese technology stocks, thanks to a bold call from one of Wall Street’s top chart analysts. Katie Stockton, founder and managing partner at Fairlead Strategies, says technical analysis shows a promising future for a specific China-focused exchange-traded fund (ETF), even as U.S. tech giants like Apple, Amazon, and Nvidia dominate the headlines.

In a recent appearance on CNBC’s “Trading Nation,” Stockton said the KraneShares CSI China Internet ETF (KWEB) is showing bullish signals on the charts. While U.S. tech stocks are sitting at or near record highs, she believes KWEB offers better risk-reward potential over the coming months.

“The charts are starting to show strong momentum in Chinese internet stocks, especially compared to some overbought conditions in U.S. tech,” Stockton noted.

A Technical Setup Favoring China Tech

Stockton pointed out that KWEB has recently broken above key resistance levels, signaling a possible shift from a long downtrend into a sustained uptrend. The fund, which holds popular Chinese internet companies like Alibaba, Tencent, JD.com, and Baidu, has been volatile in recent years due to Beijing’s regulatory crackdowns and broader geopolitical tensions. But Stockton believes the worst may be over.

“The momentum indicators are turning up,” she explained, “and KWEB has now moved above its 200-day moving average. This suggests a medium-term bullish reversal.”

For investors looking for diversification beyond U.S. tech—where valuations are stretched—KWEB’s recent breakout could present a more affordable and timely opportunity.

More on the KWEB ETF’s composition and performance here

Why U.S. Tech May Be Losing Steam

U.S. technology stocks have had a tremendous run over the past decade, powered by strong earnings, innovation, and favorable monetary policy. However, with interest rates still elevated and inflation concerns lingering, some analysts believe the rally in mega-cap tech may be slowing.

“There’s nothing wrong with U.S. tech,” Stockton said, “but much of the upside may already be priced in.”

The NASDAQ-100 Index, which includes many leading U.S. tech names, has returned over 45% in the past year. But Stockton believes future returns could be more modest, particularly if economic data begins to soften or if the Federal Reserve keeps rates higher for longer.

This potential slowdown is why she believes investors should consider rotating into underperforming segments with room to run—like China tech.

Explore current NASDAQ-100 performance data

China’s Regulatory Climate Improving

One of the main reasons for the past underperformance of Chinese internet stocks has been the Chinese government’s tough regulatory stance, particularly against large tech firms. Between 2020 and 2022, sweeping crackdowns affected business models, investor confidence, and company valuations.

But that narrative is starting to shift.

Recent policy moves by Beijing have signaled a more supportive tone toward the tech sector. Authorities have expressed interest in boosting the private economy, encouraging innovation, and supporting internet platforms that drive domestic growth.

“We’re starting to see more positive sentiment around China tech policy,” said Alicia Garcia-Herrero, chief economist for Asia Pacific at Natixis.

These developments could help unlock value in KWEB’s holdings and support a strong rebound.

Read more on China’s recent tech policy shifts

Attractive Valuations Compared to U.S. Tech

Another major advantage for KWEB is its valuation. Chinese tech companies are trading at much lower price-to-earnings (P/E) multiples than their U.S. counterparts.

For example, while U.S. giants like Nvidia and Microsoft trade at forward P/E ratios above 30 or 40, major KWEB holdings like Alibaba and Baidu are closer to 10–15. This valuation gap gives China tech more upside potential if earnings improve and sentiment rebounds.

“This is a classic case of mean reversion,” Stockton explained. “When sentiment turns and valuations are low, sharp rebounds can happen fast.”

Compare U.S. tech stock valuations on Yahoo Finance

ETF Popularity Growing Among Global Investors

ETFs like KWEB allow investors to gain exposure to Chinese tech without picking individual stocks or worrying about single-company risk. With over $5 billion in assets under management, KWEB is already one of the most popular China-focused ETFs on the market.

In recent weeks, inflows into KWEB have increased as more institutional investors begin to rotate out of U.S. tech and into global value plays.

“The global investor is looking for the next growth story,” said Tom Lydon, vice chairman of VettaFi. “Right now, China tech has a compelling case both fundamentally and technically.”

Track KWEB ETF flows and trends here

Risks Still Exist, But the Risk/Reward Looks Favorable

Despite the bullish case, investors should be aware of the ongoing risks in China. Geopolitical tensions, regulatory uncertainty, and weaker economic growth can all weigh on sentiment.

However, Stockton believes that many of these risks are already priced into Chinese tech stocks—whereas U.S. tech may be more vulnerable to disappointments.

“You’re taking on more risk, yes,” she admitted. “But you’re also getting a much better entry point.”

Bottom Line: A Contrarian Opportunity in Chinese Tech

For long-term investors and traders alike, Stockton’s analysis offers a new perspective. While much of the investment world remains focused on the Magnificent Seven stocks in the U.S., savvy investors might benefit from rotating into unloved, undervalued sectors abroad.

With improving technical trends, attractive valuations, and a more supportive policy environment, KWEB may offer a better return profile than its high-flying U.S. counterparts over the next 6 to 12 months.

As Stockton summed it up:

“The charts don’t lie. China tech looks ready to run.”

Also Read – Tech Stocks Jump, But Apple and Amazon Tumble After Market Close