How to Invest in Chinese Stocks From India?

Chinese stocks spent nearly three years in the wilderness. Between 2021 and 2023, regulatory crackdowns on private companies, prolonged zero-COVID restrictions, a sharp property-sector slowdown, and escalating US–China tensions pushed global investors out of the market. The sell-off was deep and prolonged. 

According to MSCI and Bloomberg, the MSCI China Index fell over 60% from its early-2021 peak, wiping out around USD 2 trillion in market capitalisation by late 2023. This was not a short-term correction but a full reset in expectations.

That reset is the starting point for the renewed interest in China today. Let’s break down why people are getting interested in getting exposure to Chinese Stocks and how Indians can do it via Global ETFs on INDmoney.

Why Invest in Chinese Stocks?

A Valuation Gap That Matters

While Chinese stocks struggled, US equities recovered quickly and moved to record highs. The result was a sharp divergence in valuations between the world’s two largest equity markets.

After a recovery rally in late 2025, Chinese equities are no longer trading at distressed levels. Even so, they continue to trade at a meaningful discount to US markets.

Source: MSCI, Bloomberg & Nasdaq

The gap is narrower than at the 2023 trough, but it remains significant. More importantly, expectations for China have been reset. Markets are no longer pricing a return to the high-growth era of the 2010s. Instead, potential returns now depend on earnings stability and fewer negative surprises. That lowers the bar for positive outcomes.

Diversification Is Driving Fresh Interest

Another reason China is back on investor radars is portfolio diversification. Global portfolios, including those of Indian investors, have become heavily concentrated in US equities, particularly a small set of large technology stocks.

China offers exposure to:

• A different economic and credit cycle
• A different policy framework
• Industries where it continues to play a central role in global supply chains

Reuters has consistently reported that global fund flows in 2025 and early 2026 favoured non-US and relatively undervalued markets, including China, as investors sought to reduce concentration risk rather than chase momentum.

Policy Signals Have Become Clearer

Policy uncertainty was a major driver of the earlier sell-off. That risk has not disappeared, but it has changed in nature. The aggressive regulatory phase that hurt companies such as Alibaba and Tencent between 2020-22 has largely concluded. Reports from Reuters and the Financial Times through 2025 confirms that the “rectification” of big tech has ended.

Under China’s 15th Five-Year Plan, which began in 2026, the focus has shifted toward market stabilisation and strategic priorities often described as “new quality productive forces”, including artificial intelligence, semiconductors, electric vehicles, and advanced manufacturing. 

The US Dollar Advantage 

US-listed Chinese ETFs are denominated in US dollars, giving Indian investors indirect USD exposure alongside China equity exposure. Over the past decade, the rupee has weakened from about ₹60 per dollar in 2014 to around ₹83–84 in early 2026, a 35%+ depreciation, based on RBI and Bloomberg data.

This structure also avoids direct exposure to the Chinese yuan. Investors do not need to deal with capital controls or currency convertibility risks. Instead, the investment stays within the USD ecosystem, traded on US exchanges and settled under familiar regulatory frameworks.

For Indian investors building global portfolios, this USD-denominated route adds a measurable currency cushion on top of China exposure.

How Can Indian Investors Access Chinese Stocks?

Despite improving fundamentals, most foreign investors remain cautious about buying individual Chinese stocks directly. Corporate governance concerns, variable interest entity (VIE) structures, and geopolitical risks remain. For Indian investors, there is an additional constraint: direct access to the Shanghai and Shenzhen exchanges is restricted.

This is why the most practical route is through US-listed Chinese ETFs. US-listed China ETFs trade on American exchanges, are denominated in US dollars, and operate under US regulatory frameworks. Platforms like INDmoney allow Indian investors to gain diversified exposure to Chinese equities without opening accounts in China or Hong Kong.

Why ETFs Are the Preferred Route

Data from EPFR, along with several media reports, shows that foreign exposure to China in 2025 increasingly came through ETFs rather than direct stock purchases. The reason is straightforward.

ETFs provide:

• Diversification across dozens or hundreds of companies
• Lower single-company governance risk
• High liquidity and transparent pricing

Instead of betting on one stock, investors gain exposure to the broader Chinese corporate ecosystem.

What China ETFs Typically Cover

Chinese ETFs like iShares MSCI China ETF, Franklin Ftse China Etf, Csi China Internet Kraneshares Etf, Invesco China Technology ETF, Jpmorgan Active China Etf, China Large-Cap ETF etc. cover several top Chinese stocks across sectors like Tech, Consumer Brands, Finance, Energy, EVs, Semiconductors and more.

The Risks Investors Should Keep in Mind

Interest in Chinese stocks in 2026 is driven by a completed market reset, still-discounted valuations relative to global peers, clearer policy signals, and diversification needs. However, China exposure still carries risks. 

US–China geopolitical tensions can resurface, the property sector remains a drag on growth, policy transparency is limited, and currency movements can affect USD-denominated returns. ETFs reduce company-specific risk, but macro risk cannot be eliminated.

Disclaimer:

The content is meant for education and general information purposes only. Investments in the securities market are subject to market risks, read all the related documents carefully before investing. Past performance is not indicative of future returns. The securities quoted are exemplary and are not a recommendation. This in no way is to be construed as financial advice or a recommendation to invest in any specific stock or financial instrument. Readers are encouraged to verify the exact numbers and financial data from official sources such as company filings, earnings reports, and financial news platforms and to conduct their own research, and consult with a registered financial advisor before making any investment decisions. All disputes in relation to the content would not have access to an exchange investor redressal forum or arbitration mechanism. INDmoney Global (IFSC) Private Limited, Registered office address: Office No. 507, 5th Floor, Pragya II, Block 15-C1, Zone-1, Road No. 11, Processing Area, GIFT SEZ, GIFT City, Gandhinagar – 382355.