The Chinese stock market has been in the spotlight recently, especially after witnessing a remarkable rise in September. Despite some pressure at the beginning of October, the markets surged again on October 14, igniting fresh interest among investors worldwide. With talks of the Chinese government introducing a large financial package to boost its property market, experts suggest that there might be further growth ahead for Chinese stocks.
Indian investors are increasingly exploring options to invest in Chinese markets. So, how can you invest, and what should you keep in mind?
Investment Options for Indian Investors in China
Indian investors who are looking to invest in Chinese companies have four primary options at present. These include two Funds of Funds (FoFs) and two Exchange Traded Funds (ETFs). Let’s take a closer look at these options.
1. Axis Greater China Equity Fund of Fund
This fund of funds invests in units of the Schroder International Selection Fund Greater China Fund. Schroder International actively invests in companies located in China, Hong Kong SAR, and Taiwan. Additionally, a small percentage (1.5%) of the fund’s money is invested in Australian companies listed on the Shanghai, Shenzhen, and Hong Kong exchanges. Due to its diverse portfolio, this fund offers exposure to a wide range of sectors and geographies in Greater China.
2. Edelweiss Greater China Equity Off-Shore Fund
This fund primarily invests in JPMorgan Funds – Greater China Fund, which focuses on leading companies in China, Hong Kong SAR, and Taiwan. The portfolio is relatively broad, with investments in around 60 companies from these regions. The focus here is on investing in Chinese companies that are dominant in their sectors, offering potential for long-term growth.
3. Nippon India ETF Hang Seng BeES
One of the most traded ETFs in India, the Nippon India ETF Hang Seng BeES, allows investors to invest in companies listed on the Hong Kong Stock Exchange. The Hang Seng Index, launched in 1969, tracks sectors such as finance, utilities, properties, commerce, and industry. With an average daily volume of Rs 7 crore in the last three months, this ETF offers a reliable option for Indian investors seeking exposure to Hong Kong’s stock market.
4. Mirae Asset Hang Seng Tech ETF
For investors looking to tap into China’s tech sector, the Mirae Asset Hang Seng Tech ETF offers a straightforward option. This passively managed ETF invests in the Hang Seng Tech Index, which comprises 30 leading tech companies from the internet, fintech, cloud computing, and e-commerce sectors. With an average daily trading volume of Rs 4 crore in the last three months, this ETF offers exposure to some of the biggest names in Chinese technology.
Should You Invest in Chinese Stock Markets?
China’s stock markets seem to offer exciting growth opportunities, especially with the Chinese government preparing to introduce a significant financial relief package to boost the economy. This package is likely to focus on the property market, which has been a key area of concern for the Chinese economy.
While the outlook seems positive, investing in the Chinese market is not without risks. It is unclear how much of an impact the anticipated package will have on the economy or stock market performance in the long term. Moreover, Chinese markets have shown volatility in the past, making it difficult to predict future profits.
For Indian investors, mutual funds and ETFs linked to the Chinese market can offer good diversification options. However, it’s important to consider the potential risks and rewards before making any investment decisions. Diversification is key, and adding exposure to Chinese markets can help spread out risk, but it’s essential to keep your overall investment strategy in mind.
Final Thoughts
Investing in China’s stock markets can be an exciting opportunity for Indian investors seeking global diversification. With multiple funds and ETFs available, it’s easier than ever to tap into China’s growth potential. However, as with any investment, it’s important to stay informed, assess risks, and make decisions that align with your financial goals.
Source: Moneycontrol
