Are Chinese stocks a good buy for Indian investors?

Other China-themed funds such as Edelweiss Greater China Equity Offshore The fund and the Nippon ETF Hangseng BeES are down about 17.5%-23.10% over the past month (as of March 15).

Chinese stocks saw a rebound on March 16, following a meeting of the State Council of China to support the markets. The Shanghai Composite Index rose nearly 3.5 per cent. However, the rebound came after a major fall in the Chinese markets over the past few months.

During this period, fresh investments in foreign mutual funds have been suspended, as the industry aggregate limit has reached $7 billion, preventing investors from buying at lower levels. However, experts are divided on whether the decline in Chinese stocks is really a huge opportunity.

“Chinese stocks corrected last week as the SEC in the US threatened to delist Chinese companies that did not provide adequate visibility into accounting audits. This week, JPMorgan took on three big Chinese tech firms Baidu, NetEase and Alibaba. Announced double downgrade on group. Broad regulatory and geopolitical risks remain for Chinese stocks. In terms of valuations, Chinese stocks are still not very cheap to buy,” said Maneka Reddy, Associate, Investment Research, Stockal , a fintech, which enables Indians to invest in foreign stocks.

However, some experts see the decline as a buying opportunity for investors for the long term.

“The Hang Seng Index is trading below the book value, which has never happened before. I don’t think technology adoption is going anywhere and therefore, Chinese tech stocks are likely to recover eventually. At present, foreign mutual funds have stopped inflows since the range of the industry is affected. However, investors can use the RBI’s Liberalized Remittance Scheme (LRS) to invest in China by investing through stocks or ETFs located on US exchanges. However, a time horizon of 5-7 years is essential,” said Anoop Bhaiya, Founder, MoneyHoney Financial Services.

Edelweiss Mutual Fund also issued a note asking investors to maintain investments in its China-themed fund. It noted that the fund had no exposure to any of the five Chinese stocks that were identified by the US SEC as failing to comply with the Holding Foreign Companies Accountable Act (HFCAA). The AMC noted that the issue could be resolved through negotiations between the US and Chinese governments or alternative international jurisdictions would be found, such as Hong Kong, to list the companies in question.

mint tech

Global diversification is an important part of a well-rounded portfolio and Chinese stocks are cheap by historical standards. However, tactical bets such as the decline in Chinese tech stocks are high-risk-high reward games, not risk averse. For those looking to invest, such strategic calls should account for a small portion of your portfolio.