1 / 7Do you which is the best performing market of 2025 so far – no it’s not the US-not Nasdaq, or the Dow Jones. It’s not Japan, It’s not UK and definitely not India either. The market we are referring to is China – specifically The Hong Kong Hang Seng which has rallied almost 19% so far this year. Contrast that with the Nifty, which is down 4% so far.
2 / 7So what’s powering this move? The first reason is the excitement around DeepSeek – the low cost Chinese AI model has really captured investors’ imagination.
3 / 7The second reason is improving earnings of Chinese tech giants like Alibaba and Lenovo – both have exceeded market expectations in the December quarter. The Hang Seng Tech index, has surged 34% so far in 2025.
4 / 7The third and very important reason is Chinese President Xi Jinping’s recent meeting with top entrepreneurs and industry leaders of the country. After having cracked down on big Chinese tech firms in 2021, the govt now seems to be offering an olive branch. The Chinese President says he wants to build a clean and open relationship with industry without any random fines, inspections or seizures – this is something that occurred frequently till a few years ago.
5 / 7And finally the Chinese market has valuation support on its side. The MSCI China index trades at 11x forward earnings whereas the MSCI India index is at over 20x.
6 / 7For now, only Hong Kong stocks have been roaring. Mainland China equities are still quiet- The Shanghai Composite index is up just 3.3% this year and the CSI 300 is up 3.8%.
7 / 7China announced several regulatory and monetary stimulus measures in 2024 to reboot its economy. Now with the tech industry getting turbo charged, will the Dragon really awaken? Will it start breathing fire. Indian investors are watching the developments closely.
