US market at record highs, China still cheap: Where should Indian investors invest?
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- Viram Shah, founder and CEO of Vested Finance, told Indian investors not to frame global allocation as a US-or-China choice, saying the two markets "are doing different things right now."
- The S&P 500 trades at about 22 times expected earnings, with a few giant tech companies making up almost one-third of the index, meaning investors "are mostly buying a handful of very big companies," Shah said.
- China trades at about 11 to 13 times expected earnings — roughly half the US valuation — but remains cheap "for a reason," citing policy risk, geopolitics, a weak property market, and foreign money that hasn't returned.
- Shah recommended holding both US and China exposure because "the two don't always move together," framing US exposure as providing "scale and the best companies" and China as a "low starting price" with different drivers.
- For US exposure, Shah pointed to S&P 500 or total market ETFs, noting equal-weight S&P 500 ETFs exist for investors worried about tech concentration; for China, he recommended US-listed broad-China ETFs covering mainland, Hong Kong, and US-listed shares.
- Shah suggested beginners allocate 15-25% of their portfolio globally, with a typical allocation around 30-35%, aggressive profiles around 50%, and a small subset of users opting for 100% global / 0% domestic allocation.
Why it matters: Indian investors sitting on months of domestic volatility now have a concrete framework: the 22x US valuation versus 11-13x China valuation gap quantifies exactly how much cheaper Chinese equities are, but Shah's caveat that "something can stay cheap for a long time" warns against chasing China's discount without weighing its policy and property risks — making 15-35% global allocation the practical middle ground.
