CHINESE stocks have fallen so much this year that Aluminum Corp of China Ltd is offering investors twice the profit growth of Alcoa Inc at a lower price.
The 32-percent slump in China's CSI 300 Index, the steepest decline among the world's 20 biggest equity markets, narrowed the price-earnings gap with the Standard & Poor's 500 Index to 13 percent from 139 percent by the end of last week.
Mainland stocks traded in Hong Kong, where no foreign investment limits exist, are 23 percent cheaper than United States shares, data compiled by Bloomberg News show.
The CSI 300 fell after a fivefold gain sparked concern that prices are outstripping earnings prospects as the fastest-growing major economy slows, inflation accelerates and a stronger yuan makes exports less competitive.
"The correction in China provides a good opportunity to get in," said Mark Mobius, 71, who oversees about US$42 billion of emerging-market equities as executive chairman of Templeton Asset Management Ltd in Singapore.
"Valuations of these companies are very attractive. There's no question that even if you downgrade China growth by a few points, it's still going to be greater than in the US."
The CSI 300 Index surged 478 percent in the past two years as China's government adopted measures to make state-owned shares tradable and the economy grew more than 10 percent every quarter. Chinese gross domestic product, which expanded 11.9 percent last year, may rise 10 percent in 2008 compared with 1.3 percent in the US, economists' forecasts compiled by Bloomberg show.
High valuations
The rally pushed valuations on Chinese shares to the most expensive among the largest markets. It fizzled this year amid concern new stock sales will overwhelm demand and the highest interest rates in nine years will slow profit growth.
Companies in the CSI 300 trade at an average price-earnings ratio of 26.4, down from a record 52.8 in October. That compares with a ratio of 23.4 for the S&P 500. The index for American equities last traded at a premium to the CSI 300 in 2006.