Fancy stocks that trade at about half the levels of their European or US peers, but are geared to an economy growing at more than 7 per cent? Then look no further than China, or rather Hong Kong, where Chinese stocks have reached bear market territory and are trading at just 7 times expected earnings.

Nowhere has the confluence of cheap US credit and China’s growth prospects been more obvious than in Hong Kong. Its currency is pegged to the former, and its future to the latter. No wonder the prospect of the US pumping in less money and the sight of China doing just that has struck fear into investors. The China-heavy Hang Seng index is Asia’s worst-performing benchmark this year, excluding the mainland, where foreign access is restricted.

Since mid-May, the Hang Seng China Enterprises Index has dropped a fifth, undershooting both Shanghai and the Hang Seng by a quarter. Relative to trailing earnings and book value, the HSCEI is at its cheapest since the Sars respiratory disease hit Hong Kong and China 10 years ago. At 7 times forward earnings, the index offers half the S&P 500’s ratio. But that does not mean it is a bargain.