Global market: Why is China stock market rising despite Trump’s tariff barriers? EXPLAINED with five crucial reasons

Global market: Amid fear of US President Donald Trump’s tariff barrier and trade war, most of the bourses in the Asian stock market are under pressure. Asian majors, Japanese and Indian stock markets have received the maximum beating as Japanese Nikkei has lost 1.35 per cent in YTD, India’s Nifty 50 index crashed around 4 per cent in 2025, while the BSE Sensex was over 4 per cent in this time. In contrast, the Chinese stock market is unmoved by this global market sentiment as China’s central SSE Composite Index has registered an over 3.50 per cent rally in the current year. SZSE Component Index of the China stock market has logged around 9 per cent YTD returns, whereas the CSI 300 index skyrocketed over 4 per cent.

According to stock market experts, after Donald Trump’s inauguration as the 47th US President on 20 December 2024, China’s stock market has emerged as a significant destination for portfolio flows. The Chinese government’s stimulus majors have won the faith of FIIs and domestic investors. They said the Chinese stock market benefits from the ‘Sell India Buy China’ theory as Chinese stocks are available at a discounted price, while Indian stocks are still trading at high valuations.

Portfolio flows benefit

Speaking on the reasons that have helped the Chinese stock market gain amid weak global market sentiments, VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said, “After Trump’s victory in US presidential elections, the US market has been attracting huge capital inflows from the rest of the world. Recently, China has emerged as a major destination for portfolio flows. The Chinese president’s new initiatives with their leading businessmen have kindled hopes of a growth recovery in China. The Chinese stock market responded positively to this. The Hang Seng index (FIIs buy Chinese stocks through the Hong Kong stock market) shot up by 18.7% in a month in sharp contrast to the 1.55 % decline in the Nifty.”

Attractive valuations

Pointing to the attractive valuations of Chinese stocks, VK Vijayakumar of Geojit Financial Services said, “Since Chinese stocks continue to be cheap, this ‘Sell India, Buy China’ trade may continue.” However, he said that the ‘Sell India, Buy China’ trade has happened in the past and will fizzle out soon since structural problems are constraining Chinese economic revival.

Sell India, Buy China rant

Highlighting the shift in FIIs fund flow, Vaibhav Porwal, Co-Founder of Dezerv, said, “Since October 2024, India’s market cap has fallen by about US $1 trillion, while China’s has risen by US $2 trillion. This suggests a tactical shift in FII flows. Data from NSDL shows that Foreign Portfolio Investors (FPIs) pulled out approximately ₹25,000 crore from Indian equities in January 2024 alone, in sharp contrast to the substantial inflows of over ₹1.7 lakh crore in 2023.”

Chinese stimulus

“China’s recent rally can be attributed to a blend of factors, with its economic stimulus having an overarching impact on the economy. China has stabilised its economy, including rate cuts, property sector support, and liquidity injections. These moves have helped restore investor confidence, particularly after prolonged policy tightening,” said Vaibhav Porwal of Dezerv.

DeepSeek push

“DeepSeek has disrupted the US-led tech space by offering solutions at a fractional cost, making AI-driven solutions accessible to the rest of the world. Though it is too early to comment on the overall impact, the Chinese stock market has benefited from DeepSeep in recent sessions,” said Vaibhav Porwal.

FII selling continues unabated in the Indian stock market. After selling stocks for ₹81903 crores through the exchanges in January, FIIs followed it up by selling stocks for ₹30,588 crores on 21 February 2025. This takes the total selling in 2025, so far, to ₹1,12,492 crores (NSDL). This massive selling has resulted in the Nifty yielding negative returns of 4% YTD.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.