The recent surge in the Chinese stock market has caught the attention of investors worldwide, including those in India. China’s renewed stimulus measures have pushed its market capitalisation back to the $10-trillion level for the first time since August 2023.

As India’s investment community eyes this growth, the question arises: Should you invest in China, and if so, how?

Why is the Chinese market booming?

China’s economic recovery has been driven by targeted government interventions, including a stimulus to boost consumption, revive the real estate sector, and stabilise the equity markets.

According to Radhika Gupta, MD & CEO of Edelweiss Asset Management, the valuation story of the Chinese market is currently supportive, despite the post-COVID slowdown .

“China’s market, being the second largest globally, offers attractive valuations for long-term investors,” Gupta said.

She cautioned, however, against short-term trading, given the market’s volatility.

Feroze Azeez, Deputy CEO of Anand Rathi Wealth, agreed that China’s resurgence offers exciting opportunities for Indian investors, but suggested a structured approach.

“Investing through mutual funds managed by experienced professionals can be a prudent strategy,” Azeez noted.

Key themes for investing in China

When exploring investment opportunities in China, Gupta highlighted several  themes that are likely to benefit from the current economic climate:

Technology:

China’s advancements in artificial intelligence (AI) and tech innovation are expected to drive future growth.

Insurance sector: With reforms underway, the insurance sector shows potential for a turnaround.

Carbon neutrality and electric vehicles: As the world’s largest electric vehicle market, China is well-positioned to benefit from the global shift toward sustainability.

Real estate and home improvement: Government stimulus may revive real estate, indirectly boosting the home improvement and building sectors.

Gupta advises caution when it comes to financials and banking sectors, which could face more uncertainty.

Investment options for Indian investors

There are several ways for Indian investors to gain exposure to the Chinese market, particularly through mutual funds and ETFs that focus on Chinese equities.

Feroze Azeez highlighted a few top-performing funds:

Fund Name	Investment type	Focus
Axis Greater China Equity Fund of Funds	Mutual Fund	Greater China Equities
Edelweiss Greater China Equity Offshore Fund	Mutual Fund	Greater China Equities
Nippon India ETF Hang Seng BeES	ETF	Complete Hang Seng Index
Mirae Asset Hang Seng TECH ETF	ETF	Hang Seng Tech Stocks

Both Gupta and Azeez stressed the importance of diversification and cautioned against focusing solely on tech stocks, as that would increase the risk level.

Investment considerations

While China’s market offers attractive opportunities, experts recommended a long-term investment strategy.

Gupta emphasised that “China’s story is a great one for long-term investors,” but also warned against short-term, tactical trades due to the market’s volatility.

Both Azeez and Gupta advised leveraging mutual funds with experienced managers for better risk management and diversification.