China's Resurgence Could Lure Indian Investors To Diversify Allocations — Here's How To Capitalise

The awaited revival in the Chinese stock market has come through. The benchmark gauge of the neighbouring nation has entered a technical bullish zone after the stimulus blitz unveiled by the government.

The South Asian country's nine-day rally was such that it regained the influence it lost over 10 months in the key MSCI emerging markets index.

This rally comes after the country unleashed a series of measures, including interest rate cuts, liquidity for banks, and incentives for homebuyers, which were announced last week. Further, the 24-man Politburo vowed to complete the country's annual economic goals.

China's CSI 300 is up 22% from its September lows to enter a technical bull market, according to Bloomberg. While the Chinese stock market was closed for its Golden Week festivities, the benchmark closed the ninth straight day surge with an 8.5% jump on Monday.

How Can Indian Retail Investors Capitalise? 

Domestic investors can take advantage of the recent rally and positive outlook of Chinese and Hong Kong equities.

Investments can be made through mutual funds or exchange-traded funds. Investments can be made through funds investing directly into listed equities or through fund of funds route as well.

China And Hong Kong-Specific Funds

Edelweiss Greater China Equity Off-shore

• Focus: This fund invests in Greater China, Hong Kong, and Taiwan. It is an international fund that typically invests in the JPMorgan Fund—Greater China Fund, giving exposure to companies in these markets.

• Returns: 

  One month: approximately 2.70%.

  Three months: approximately 13.57%.

  One year: The fund has returned 20.22% over the last year.

Nippon India ETF Hang Seng Bees

• Focus: This ETF tracks the Hang Seng, which is the benchmark index for the Hong Kong Stock Exchange.

• Returns: 

  One month: approximately 1.11%. 

  Three months: approximately 3.12%. 

  One year: It has delivered a return of 22.4%. 

Global Funds

ICICI Prudential Global Advantage Fund (FoF)

• Focus: This fund invests in international markets, including China and Hong Kong, through its underlying investments. It offers a diversified global portfolio with a focus on emerging markets, including China.

• Returns: 

  One month: approximately 1.5%.  

  Three months: approximately 6.05%.  

  One year: The fund has delivered a return of 25.25%.

Mirae Asset NYSE FANG+ ETF (FoF)

• Focus: This fund primarily tracks the NYSE FANG+ Index, it has exposure to Chinese technology companies like Alibaba, Baidu, and Tencent. It's more tech-focused but includes key Chinese tech giants.

• Returns: 

  One month: approximately 5.90%. 

  Three months: approximately 16.85%. 

  One year: The fund has delivered a strong return of 53.66%.

Other Ways To Invest

Investors can also make direct investments in Chinese or Hong Kong listed stocks through foreign brokers, that is, interactive brokers, Vested Finance Inc., Zerodha.

Chinese stocks listed abroad, that is, Alibaba, Tencent and JD.com which are listed on the NYSE, can also be considered for investment. 

Key Considerations

• Risk management: These funds are generally high-risk due to their exposure to international markets and foreign currencies.

• Expense ratios: International funds tend to have higher expense ratios compared to domestic funds, so consider the costs involved.

• Diversification: Many of these funds offer exposure not only to China and Hong Kong but also to other international markets, which can help diversify your portfolio.