In the battle between China technology and US technology, there was a clear winner this year.

Tech giants in the US are back at their recent highs, up 15% in 2021, while the CQQQ China Tech ETF is lower. Tech names on the mainland continue to struggle as Beijing cracks down on companies like Alibaba in an anti-monopoly push.

So should investors stick with the winners in the US or bet on the outsiders of Chinese technology?

The answer depends on the reasons for China’s recent moves, according to Gina Sanchez, CEO of Chantico Global and Chief Market Strategist at Lido Advisors.

“If this is really just an antitrust and anti-competitive move, then it can be argued that a lot of the bad news is really priced into these stocks. They’ve just been beaten up, and the top stocks on the CQQQ are all well below their” 5 years – and 10-year P / E levels, which means they could look very attractive, “Sanchez told CNBC’s Trading Nation on Thursday.

The CQQQ ETF, which holds stocks like Tencent and Bilibili, trades at 27 times trailing profit. In February it peaked 52 times.

“If this is more than that, if the Chinese government expresses its desire for important companies to join their societal agenda, then this could actually grow into something bigger,” said Sanchez.

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China’s five-year plan aims to strengthen the domestic base, expand wealth creation and boost consumer power. This could put pressure on domestic tech companies, she said.

“If this is indeed a move to force higher wages, force broader wealth sharing, and force wealth creation, then indeed the margins we have seen on these companies could actually change and the business model could change and the PEs “that we’re used to may not apply,” said Sanchez. “That’s the risk we’re playing right now.”

Matt Maley, senior market strategist at Miller Tabak, agreed that Chinese technology stocks continue to have long-term problems. However, after weakness in the first half of the year, they could pick up again in the short term.

“If you look at the CQQQ chart, an inverse head and shoulders pattern has formed. Of course, a head and shoulders pattern tends to be bearish, so an inverse head and shoulders pattern is bullish. “Said Maley during the same segment.

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“It has to break through this cutout, which is at the USD 85 level. If we can get above that level, it would take some people by surprise, pull them aside and cause Chinese technology stocks to outperform for a few months, “said Maley.

The CQQQ ETF traded just above $ 81 per share on Friday. It would have to go up 5% to get to $ 85.

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