China’s Stock Market Boom: ETFs to Catch the Wave

China’s stock market is heating up again. A mix of huge household savings, fresh liquidity from policymakers, and global tailwinds has powered a sharp rally, with retail investors leading the charge.

Savings Turn Into Market Fuel

Chinese households have built up more than ¥160 trillion ($22 trillion) in savings — an amount equal to roughly a third of the U.S. stock market’s total size. With property markets struggling and bank deposits offering low returns, more families are putting that money into stocks.

Retail investors now make up nearly 90% of daily trading onshore, meaning their choices heavily sway market moves. Beijing has supported this shift too: the People’s Bank of China recently injected ¥600 billion through its medium-term lending facility, keeping liquidity flowing. On top of that, dovish signals from the U.S. Federal Reserve have boosted the appeal of Chinese stocks compared to U.S. bonds, pulling even more money into equities.

Indexes Surge — But Risks Linger

The rally has been broad.

- Shanghai Composite: +13% year-to-date

- CSI 300: +10%

- Hang Seng Index: +30% in 2025, powered by a record $90 billion inflow from mainland investors in just the first half of the year.

A big driver has been AI excitement. The August release of DeepSeek’s V3.1 model, a hybrid system designed to run efficiently on China’s own chips, sparked a wave of tech optimism. Alongside giants like Baidu, Tencent, Alibaba, and SenseTime, a new wave of startups — Zhipu AI, Baichuan, MiniMax, Moonshot AI — is pushing innovation fast.

Valuations still look relatively cheap compared to China’s GDP and household wealth, giving bulls more reason to stay optimistic. That said, challenges remain: falling property prices, weak retail sales, and deflation risks could all dampen momentum. For now, though, FOMO (fear of missing out) seems to outweigh the worries.

ETFs in the Spotlight

The boom has spilled over into ETFs, giving traders a simple way to join the rally:

- Tech funds are leading:

- iShares MSCI China Tech UCITS ETF (CTEC): +17% YTD, +2.8% last week

- Amundi MSCI China Tech ETF: +16% YTD, +4% weekly

- Mid-caps are also strong:

- Invesco S&P China A MidCap 500 ETF: +14% YTD

- Broad market plays are rising too, with multiple MSCI China A ETFs up more than 4% this week.

Still, investor flows show a preference for targeted tech and growth exposure rather than blanket index bets. For example, the iShares MSCI China A UCITS ETF (CNYA) saw outflows despite solid gains.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Always consult a licensed financial professional before making investment decisions.