Chinese stocks top Indian MFs' overseas buying list in March

 


Chinese stocks top Indian MFs' overseas buying list in March
Data from Primemfdatabase.com shows that shares of Chinese firms like SenseTime Group Inc., Industrial & Commercial Bank of China, China Construction Bank Corp., and Bank of China saw the maximum buying among all overseas purchases by mutual funds in March.

By Steven Orlowski, CFP, CNPR

In a notable shift in global investment preferences, Indian mutual funds significantly ramped up their exposure to Chinese equities in March 2025, with data from Primemfdatabase.com revealing that Chinese stocks dominated overseas purchases during the month.

Leading the list were prominent Chinese firms such as SenseTime Group Inc., a leading AI and facial recognition company; Industrial & Commercial Bank of China (ICBC), the world's largest bank by total assets; China Construction Bank Corp., and Bank of China, both of which are key players in China's state-owned banking sector.

Resurgence of Interest in Chinese Markets

This renewed interest in Chinese equities comes despite ongoing global economic uncertainties and previous investor caution due to regulatory crackdowns and geopolitical tensions. Analysts attribute the surge in buying to several factors, including attractive valuations, improved earnings outlooks, and signs of economic stabilization in China.

"Chinese stocks, particularly in the banking and tech sectors, are starting to look undervalued relative to their global peers," said a senior fund manager at a leading Indian asset management firm. "Indian mutual funds are seeking diversification and see long-term potential in China’s gradual economic reopening and policy support for key industries."

SenseTime Leads the Pack

Among the top picks, SenseTime Group Inc. saw the most significant inflows, reflecting investor confidence in China’s artificial intelligence sector. Despite facing regulatory hurdles and geopolitical scrutiny, SenseTime remains a leader in AI innovation, offering services across security, finance, healthcare, and smart city infrastructure.

Banking giants ICBC, China Construction Bank, and Bank of China also attracted considerable attention, bolstered by resilient financials, high dividend yields, and backing from state-driven initiatives to support domestic lending and infrastructure projects.

Strategic Diversification Amid Market Volatility

Indian mutual funds have been steadily increasing their international allocations over the past few years, and China appears to be regaining favor after a period of underperformance. March’s data underscores a broader strategy among fund houses to hedge against domestic market volatility by tapping into emerging global opportunities.

According to Primemfdatabase.com, Chinese equities accounted for over 35% of all overseas equity purchases by Indian mutual funds in March, up sharply from 22% in February.

Looking Ahead

While geopolitical risks and regulatory opacity remain concerns, the latest data signals a cautiously optimistic stance among Indian fund managers regarding China’s economic trajectory.

“India’s mutual fund industry is maturing, and part of that evolution includes identifying alpha-generating opportunities abroad,” noted a market analyst at a Mumbai-based brokerage. “China, with its mix of established giants and tech disruptors, offers a compelling proposition—provided investors are prepared for the risks.”

As global markets continue to grapple with inflationary pressures and central bank policy shifts, the focus on Chinese stocks highlights a key trend: Indian mutual funds are increasingly willing to look beyond traditional safe havens and tap into diverse, high-potential international assets.

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