1 week Ago By The Hans India
With a $14 trillion market capitalization, China’s equity market is the second-largest in the world, just behind the US. Since 2024, Chinese markets have been on a strong rally, with major indices posting impressive gains. Global investors are taking notice, and thanks to trading platforms like Appreciate, Indian investors now have an easy way to participate in this surge.
But before we dive into the how, let’s first understand why China’s markets are booming. What Happened? The Shanghai Stock Exchange index, SSE composite index was at its highest on 16, October 2007 at 6,124.04 points and since then, not only has it not reached that peak, but for the next 18 years the index did not go beyond the 4000 points mark, except for once in 2015 when it barely crossed the 5000 mark.
� But in October 2024, the SSE Composite index recorded the biggest single-day increase in almost two decades, gaining 8.1%. Between September and October 2024, the index gained almost 30%, its highest in decades.
The SSE Composite is not the only index that saw enormous gains; other Chinese Indices like the CSI 300, China’s blue-chip index, and Hong Kong’s Hang Seng Index saw over 30% gains in the same period. This rally has continued its way into 2025 as well. As of March 24, 2025, the Hang Seng Index has gained 21.
82% YTD, though not in the same magnitude, the SSE and the CSI 300 have managed to stay green by returning 3.29% and 3% respectively. Why is this Important? What makes this rally so interesting is that it occurs at a time when both the Indian and US markets are in the red.
The S&P 500, despite setting two all-time highs in the first two months of 2025, is down 3.42% YTD primarily due to concerns regarding tariffs and inflation. Meanwhile, India’s Nifty has been recovering from its worst correction in the last 29 years.
Reasons Behind this Rally 1. Stimulus measures On September 24, 2024, China’s central bank, the People’s Bank of China (PBoC), rolled out its biggest stimulus package since COVID-19 to support the struggling economy. The PBoC announced interest rate cuts and reduced the minimum down payment to 15% from 25%, making homeownership more accessible and boosting consumer confidence.
Additionally, China’s central bank has launched a promised 500 billion yuan ($70 billion) funding program to aid the stock market. This move aims to stabilize financial markets and restore investor confidence. Alongside this, the PBoC has also set up a new mechanism to boost government bond trades, ensuring liquidity and smoother operations in the bond market.
2. FII Investment Since late September 2024, the barometer of the Indian capital market, Nifty 50, has consolidated by almost 10%. One of the primary reasons for this is the FII divestment.
The month of October recorded the biggest sell-off by the FIIs since COVID. The Foreign Institutional Investors exited nearly $10 billion worth of investments. The FIIs adopted the “Sell India, Buy China” trade strategy, wherein they exited from their Indian investments and flushed them into China.
3. Advancements in AI Tech The 2024 surge of the Chinese capital market got a boost from the release of DeepSeek, the dark horse that single-handedly caused a massive shockwave across the US markets. The S&P 500 Information Technology index shed 5.
6% on January 27, 2025, driven mainly by Nvidia's dramatic 17% fall. Apart from DeepSeek, the Chinese auto giant BYD has been making waves worldwide with its best-in-class EVs. In the third week of March alone, FIIs poured $1.
2 billion into the world’s second-largest economy. How Can You Benefit From This? With China’s stock markets rallying, Indian investors have multiple ways to tap into this growth. One of the easiest and most effective ways is through Exchange-Traded Funds (ETFs), which offer diversified exposure to Chinese stocks without the complexities of direct investments.
Instead of picking individual stocks, ETFs allow investors to track broad market indices or specific sectors, making them a safer and more convenient way to invest in China. Platforms like Appreciate have made it even easier for Indian investors to get their hands on ETFs, tracking Chinese indices. Here are some of the ETFs Indians can consider to diversify their portfolios into the Chinese markets: 1.
iShares MSCI China ETF (MCHI) MCHI offers broad exposure to large and mid-sized Chinese companies across various sectors, including technology, finance, consumer goods, and industrials. It is one of the most comprehensive China-focused ETFs, returning 19.51% YTD and 39% in the last 1-Year.
The expense ratio of this ETF is just 0.59%. 2.
iShares China Large-Cap (FXI) This ETF, managed by BlackRock, offers investors access to 50 of the largest and most actively traded companies in China. With YTD returns of 21.45% and returning an astounding 52.
27% in the last 6 months, FXI carries a slightly higher expense ratio at 0.74% 3. Invesco China Technology ETF (CQQQ) CQQQ is a China-focused tech ETF that invests primarily in technology, software, and semiconductor companies.
It provides exposure to China’s innovation-driven economy, making it an excellent pick for investors betting on China’s AI, cloud computing, and digital transformation sectors. This ETF has returned 17.70% YTD and a massive 41.
30% in the last 1-Year, and carries an expense ratio of 0.65% Conclusion *Data mentioned are as of March 25, 2025 When investing in Chinese markets, one factor that investors should keep in mind is the ongoing tensions between the US and China. Such geopolitical tensions can hurt the capital markets of the country most affected by such tensions.
Globally diversifying one’s investments has always been a safe strategy to protect one’s portfolio against unforeseen risks. As we saw, the Chinese markets rose, while the Indian markets fell. In early 2025, the US markets were setting new all-time highs back to back, while the Indian markets struggled.
If an Indian investor allocated part of their portfolio to China and the US, they could have successfully shielded their investments from the effects of the Indian market correction. To not miss out on such growth opportunities in the future and to diversify your portfolio globally, Download the Appreciate app from the Google Play Store today. Disclaimer: Investments in securities markets are subject to market risks.
Read all the related documents carefully before investing. The securities quoted are exemplary and are not recommendatory. (No Hans India Journalist was involved in creation of this content).
