The China stock market has emerged as a global powerhouse, offering immense growth potential. For Indian investors, diversifying their portfolio by investing in China stocks can unlock new opportunities. This guide provides a comprehensive roadmap to help you understand how to invest in the China stock market from India, including the benefits, the process, and the associated risks.

Why Invest in China Stocks?

China boasts one of the largest economies in the world, driven by rapid industrialization, technological advancements, and a burgeoning middle class. Here’s why investing in China stocks makes sense:

• Lucrative Valuations:

  Prolonged underperformance combined with depressed headline valuations means Far East markets, especially Hang Seng listed equities provide a favorable risk-reward scenario.

  

• Ahead of the Bull run :

  In the Q3CY23, inward FDI flows became negative for the first time since the start of the published timeline in 1998 and have turned positive since, showcasing renewed Investor sentiment.

  

• • Domestic Consumption :

    China’s shift from an export-led growth provides massive opportunities for domestic consumption. Despite several economic upheavals, retail consumption has grown at ~11% CAGR over 20-yrs

    

• Better priced than peers :

  Larger companies, available at lower price, compared to Indian peers.

• Economic Growth :

  China’s GDP growth consistently outpaces many other major economies, making it an attractive investment destination.

• Sector Diversity :

  From technology giants like Alibaba and Tencent to rapidly expanding healthcare and green energy sectors, the market offers diverse investment options.

• Global Market Integration :

  With initiatives like the Stock Connect program, investing in China stocks has become more accessible for global investors.

How to Invest in China Stock Market from India

Investing in the China stock market from India requires navigating a few key steps:

1. Indirect Investment Through International Equity Funds

International equity funds provide a hassle-free way to gain exposure to Chinese stocks. Leading funds like Aequitas International Equity Funds invest in global markets, including China. These funds are managed by experts, offering diversification and reduced risk.

2. Open a Brokerage Account

Choose a brokerage platform that provides access to international markets, including the Shanghai or Shenzhen stock exchanges. Look for platforms offering ease of use and competitive fees.

3. Invest via ETFs (Exchange-Traded Funds)

ETFs focused on China stocks are a popular option for Indian investors. They allow you to invest in a basket of Chinese companies with lower costs compared to direct stock trading.

4. Comply with Regulatory Guidelines

• Liberalized Remittance Scheme (LRS): Indian investors can remit up to $250,000 per financial year for overseas investments.
• Tax Implications: Gains from international investments are taxed as per Indian laws, so consult a financial advisor.

Click to explore Aequitas International Equity Fund in Chinese Equities

Benefits of Investing in China Stock Market

Understanding the benefits can strengthen your decision to explore this market:

• High Growth Potential:

  China is a leader in industries like e-commerce, AI, and renewable energy, offering long-term growth.

• Currency Diversification :

  Investments in Chinese yuan provide a hedge against rupee depreciation.

• Global Exposure:

  China stocks add geographical diversity to your portfolio, reducing reliance on Indian markets.

Click here if you are a HNI and wish to explore investing in China

Should You Invest in China Now in 2025?

The year 2025 presents unique investment opportunities and challenges for investing in China.

• Positive Outlook:

  Economic reforms and government support for high-growth industries enhance the appeal of China stock market investing.

• Geopolitical Risks :

  Trade tensions and regulatory changes are factors to monitor closely.

• Expert Advice:

  Opt for professional services through a registered & established fundhouse . You can also explore the international equity funds offered by Aequitas focusing on direct equity partcipation in China

Pros and Cons of Investing in China

Pros

• Access to one of the world’s fastest-growing economies.
• Exposure to innovative industries like EVs and biotechnology.
• Favorable valuation of Chinese stocks compared to developed markets.

Cons

• Regulatory uncertainty in the Chinese market.
• Political tensions impacting investor confidence.

Read More: Understanding the Opportunities and Risks of Investing in China

Conclusion

Investing in China stocks from India can be a strategic move for portfolio diversification and growth. Whether you choose direct trading, ETFs, or international equity funds, staying informed and understanding the risks are crucial. To streamline the process, explore trusted platforms like Aequitas, which specialize in offering access to the best international equity funds in India.

FAQs About Investing In China Stock Market

1. How to invest in the China stock market from India?

To invest in the China stock market from India, you can either go for international equity mutual funds, China-focused ETFs, or open a brokerage account that provides access to Chinese exchanges. The other route is through funds like the Aequitas International Equity Fund, which offer expert-managed exposure to Chinese stocks.

2. How can I invest in China stock market indirectly?

You can indirectly invest in China by choosing mutual funds or ETFs that include Chinese equities. Many Indian fund houses and global platforms offer international equity funds that invest in China’s fast-growing sectors. 

3. Is it legal for Indians to invest in China stock market?

Yes, it is legal under the Liberalized Remittance Scheme (LRS). Indian residents can legally invest up to $250,000 per financial year in foreign assets, including Chinese stocks, through approved methods. Additionally, investors willing to put more than $250,000 can opt for OPI route (Overseas Portfolio Investments)

4. What are the benefits of investing in China stocks?

Some of the main benefits include:

• Access to one of the world’s fastest-growing economies
• Exposure to innovative sectors like EVs, tech, and green energy
• Better valuations compared to Indian or US counterparts
• Geographical and currency diversification for your portfolio

5. What are the risks of investing in China stock market?

The key risks include:

• Regulatory uncertainty from Chinese authorities
• Geopolitical tensions with countries like the US or India
• Market volatility due to government interventions or trade restrictions
  You should consult a financial advisor or invest through a managed fund to mitigate these risks. Explore the opportunities and risks of investing in China and Far East
  

6. Can I invest in China stocks using Indian brokerage accounts?

Most Indian brokers do not offer direct access to Chinese exchanges. However, some international brokers and platforms do. Alternatively, you can invest via international funds like Aequitas International Equity Fund, which focuses on a robust strategy to participate in Chinese equities.

7. Should I invest in China now in 2025?

2025 presents a unique opportunity due to:

• Renewed FDI inflows
• Government support for high-growth industries
• Attractive valuation levels
  However, always weigh the risks and consider investing through a trusted fund manager or international equity fund.

8. What is the easiest way to invest in China from India?

The simplest route is through international mutual funds or ETFs that invest in Chinese equities. These require minimal setup, are SEBI-compliant, and reduce the complexity of direct investing.

9. Is investing in China stocks profitable?

China stocks can be profitable due to:

• Long-term growth potential
• Low current valuations
• Strong domestic consumption trends

That said, it’s best suited for long-term investors who are comfortable with market fluctuations and geopolitical risks.

10. Can HNIs (High Net-Worth Individuals) invest in China?

Yes. HNIs can leverage international equity funds, portfolio management services (PMS), or global brokerage platforms for direct equity participation in China. Funds like Aequitas International Equity Fund are ideal for tailored exposure.

11. Are China-focused ETFs available for Indian investors?

Yes, China-focused ETFs can be accessed through certain Indian brokers or international platforms. These offer a low-cost, diversified way to invest in multiple Chinese stocks without the hassle of direct trading.