In the modern world of high-speed connectivity, Investors aren’t restricted to their own countries. In fact, from Silicon Valley to Shanghai, opportunities are everywhere. And for Indian investors seeking to diversify their portfolios while tapping into one of the most powerful economy, China stands out.
Thanks to its technology giants and a growing middle class and a constant economic change China’s markets for capital are an incredible source of opportunities. However, here’s the main question: How can you make a profit investing in the China markets from India? The good part is that it’s not difficult as it appears as long as you’ve got the right information, you’ll be able to start investing with confidence.
In this article, we’ll explain how the Chinese market operates and the options open for Indian investors, what risks they should be aware of and ways to mitigate them. No matter if you’re a novice or a veteran investor who’s branching out, you’ll get useful information here.
Why Invest in China from India?
We’ll start by stating the obvious: China is second largest economy in the world. There are mega-corporations such as Alibaba, Tencent, BYD, Baidu, and China Mobile, and is a center of advancement in technologies, renewable energy manufacturing, e-commerce, and other areas.
For Indian investors making a bet in China can provide:
- Diversification that goes beyond Indian equity
- Allows access to industries that are growing rapidly such as Fintech, AI, EVs and infrastructure
- Exposition to export market
As per the World Bank, China has always shown high growth in GDP (albeit decreasing in recent times) It is an important player in international trade and in the field of innovation. Find out more about the World Bank here.
How the Chinese Stock Market Works
Major Chinese Stock Exchanges
The stock market in China is broken down into three exchanges:
- Shanghai Stock Exchange (SSE) – Focuses on the largest-cap firms; it is China’s version to the NYSE.
- Shenzhen Stock Exchange (SZSE) – Focuses on the smaller and high-growth enterprises.
- Hong Kong Stock Exchange (HKEX) – Operates within a completely different legal system and is open to investors from around the world.
Mainland exchanges (SSE and SZSE) are often less restricted. HKEX offers an opportunity for investors from abroad.
A-Share vs. H-Share
- A-Shares are traded for RMB in the mainland China exchanges (Shanghai, Shenzhen). They are typically only accessible to residents of the mainland or foreign investors.
- H-Shares: Chinese companies listed on the Hong Kong Stock Exchange, trading in HKD and available to foreign investors.
- Red Chips: Chinese companies incorporated in countries other than the mainland of China, however, are listed on the HKEX.
- ADRs (American Depository Receipts): Chinese companies are listed in U.S. exchanges, making these available via Indian foreign brokers.
Can Indian Investors Buy Chinese Stocks?
Yes. However, it is not directly linked to Chinese mainland exchanges (SSE/SZSE) due to regulatory restrictions. There are other legal options to make investments, such as:
- Mutual Funds & ETFs geared explicitly towards Chinese markets
- International Brokerage Platforms
- Indian Funds With Global Exposure
- ADR route through U.S.-listed Chinese companies
Let’s go over each thoroughly.
Options to invest in Chinese stocks from India
1. Invest via China-Focused Mutual Funds
The easiest option to allow Indian investors to be exposed to the Chinese market is via the mutual fund provided by Indian AMCs, which put money into Chinese or other Asia-Pacific markets.
Examples include:
- Edelweiss Greater China Equity Offshore Fund
- ICICI Prudential China Equity Fund
- Nippon India Asia Pacific Equity Fund
They invest in foreign equity. They typically track indices or directly invest in Chinese firms through a foreign partnership.
Pro Tip: Ensure you check the fund’s fundamental holdings cost ratio, as well as its past performance, before making an investment decision.
2. Invest via ETFs (Exchange Traded Funds)
ETFs provide the opportunity to take advantage of a cheap, low-cost way to put your money into the market. They offer a range of Chinese stocks. Although India isn’t a place to find China-specific ETFs, you can make use of the international brokerage accounts for access to ETFs such as:
- iShares China Large-Cap ETF (FXI)
- KraneShares CSI China Internet ETF (KWEB)
- SPDR S&P China ETF (GXC)
The ETFs can track Chinese indexes or specific sectors, such as energy or technology.
It is necessary to have an account with a broker that can support international markets. Read more about this in the next.
3. Use International Brokerage Platforms
A different and effective method is to establish an International brokerage account, which allows Indian citizens to participate in international markets, including U.S.-listed Chinese ADRs and ETFs.
The most popular broker for Indians:
- Interactive Brokers
- Vested
- INDmoney
- Groww (Global investment option)
- Zerodha (via tie-ups with third-party platforms)
They allow you to access U.S.-listed Chinese stocks and ETFs , including:
- Alibaba (BABA)
- JD.com (JD)
- Tencent Music (TME)
- Baidu (BIDU)
They are ADRs — U.S.-traded representations of international stocks.
4. Put your money into Indien Funds with Global Exposure
A number of Indian mutual funds have invested in international markets to diversify their strategy. Often, they include Chinese technology giants as their most significant investments.
Examples:
- Parag Parikh Flexi Cap Fund (invests in Alphabet, Amazon, and Chinese shares through international funds)
- Mirae Asset FANG+ ETF of NYSE (includes Chinese giants like Baidu or Alibaba sometimes)
This is an excellent option for those who wish to have limited exposure to China without incurring a significant investment.
5. Invest in Chinese ADRs via U.S. Exchanges
Numerous high-profile Chinese businesses are listed on the U.S. markets via ADRs. The method is becoming more popular due to:
- It eliminates any complexities associated with currency conversion
- It provides high liquidity
- International broker applications in India
But, regulatory scrutiny from China and the U.S. and China has led to the delisting of risky assets in certain cases. So pay attention to international financial developments.
Read Also: Can a Non-U.S. Citizen Invest in the Stock Market?
Risks and Challenges of Investing in China
Any investment comes with risks, and China is no different.
1. Regulatory Risks
China is the distinction of having a government-controlled economy. The sudden government-imposed crackdowns in certain areas (e.g. tech, telecommunications or education) could affect share prices over the course of a day.
2. Geopolitical Tensions
U.S.-China or India-China tensions could result in tensions between the two countries and result in tariffs or restrictions that impact the company’s revenues.
3. Currency Fluctuations
If you decide to invest in RMB or other assets that are HKD-denominated You’ll be exposed to the risk of forex. The fluctuations in exchange rates can affect your return.
4. Limited Transparency
Certain Chinese businesses are accused of inconsistency with their governance and accounting procedures. Due diligence is essential.
However, despite these risky situations, a majority of international investors continue to allocate money to China because of the country’s size, its innovation and its potential for the long term.
A Real-World Experiment Rishi’s investment Journey to China
Rishi is 30, a marketing professional from Mumbai began to explore investments in global markets during the pandemic. He was looking to get exposure to the newest tech market and China was the first country that caught his attention.
At first, he invested Rs5,000 per month into the Edelweiss Greater China Fund, providing him with indirect exposure. When his confidence increased the fund was opened, he set up an account at Vested which he linked to his Indian bank account and then bought shares in Alibaba (BABA) as well as the the KWEB ETF.
Rishi’s portfolio has now grown to at 12% global, and 6 percent of it in Chinese stocks. “I’ve learned to balance the high growth with the risks,” Rishi declares. “It’s about the long game.”
Step-by-Step Guide: How to Start Investing
- Choose Your Investment Route
- Mutual Fund, ETF, ADR, or International Broker?
- Complete KYC and Compliance
- PAN, Aadhaar, bank details and sometimes, the passport of foreign accounts.
- Fund Your Account
- Make use of LRS (Liberalised Remittance Scheme) guidelines to transfer money overseas (up up to $250,000 per year legally from India). Find out more on the RBI LRS Portal.
- Select Your Stocks or Funds
- Diversify across sectors: tech, real estate, industrials.
- Track Performance and Rebalance
- Keep track of your portfolio each quarter, or every two years.
Conclusion If You Should Invest In China Stock Market? China Stock Market from India?
Absolutely, only with the right strategy.
China is an exciting market that offers both opportunity as well as complexity. It is a great investment opportunity for Indian buyers, the market could provide value, diversification as well as a fresh dimension in your investment portfolio. It should however be viewed by securing your knowledge, prudence, and with a balanced mind.
Begin with a small amount. Learn continuously. Make sure to invest in what you are able to comprehend.
Ready to Diversify Globally?
If you’re considering the possibility of investing globally, China could be your first big step. Look into mutual funds or create an international broker account now and make one step towards creating a diverse, investment portfolio that is ready for the future.
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