Emerging Markets: Indian Investors Turn to China and Brazil
Investors, particularly Indians under the Reserve Bank of India’s remittance scheme, are increasingly favoring emerging markets like China and Brazil over US equities due to attractive valuations and shifting trends. Significant increases in investment volumes have been noted, alongside a notable decline in US stocks since January.
In what appears to be a shift in investment trends, retail investors who typically utilize exchange-traded funds (ETFs) are now venturing into emerging markets, particularly China and Brazil. Recent data from broking platforms indicate an increased preference for these regions, especially among Indian investors utilizing the Reserve Bank of India’s liberalized remittance scheme (LRS). This change accompanies a notable decline in US equities following tariff disputes initiated under President Donald Trump.
Interviewing six brokers with access to international markets reveals that both China and Brazil have witnessed a more substantial growth in investments compared to the US this year, despite the overall numbers starting from a low level. Particularly, interest in China-oriented ETFs has surged since early 2025. Sitashwa Srivastava, the CEO of Borderless, noted, “After January, there was a growing interest in China, particularly in China-oriented ETFs as well as a few Chinese companies—a time where we noticed a bit of a de-focus on the US.”
At Vested Finance, another brokerage firm, data shows Brazilian ETF investments soared to $3 million by 2025, a staggering increase of 80 times compared to all of 2024. Likewise, investments in China-focused ETFs escalated by 10 times to reach $10 million. In comparison, US ETF volumes grew only three times, sitting at $80 million for the same period.
Data from Appreciate Wealth echoes this trend, indicating that investments into China skyrocketed by 36% in trade volume and 61% by investment value in 2025. Investments in Brazil outperformed, experiencing a 110% boost in volume and an astonishing 245% rise in value, while US-focused investments increased at a much slower pace of just 11% in volume and 18% in value.
A particularly appealing aspect of investing in China and Brazil is the attractive market valuations compared to the US. The Dow Jones has seen a decline of 6.57% since January 1, while the Shanghai Composite and Brazilian IBovespa indices increased by 1.06% and 10.7%, respectively. Trailing valuations for both Brazil and China remain lower than those for the Dow, which stands at around 23.21x.
Paralleling this increase in investment is the significant rise in outbound remittances via LRS for equity and debt, as shown by a 65% month-on-month increase to $173.84 million in February, according to RBI data. Year-on-year outbound investments rose by 20% in FY24, marking a 3.6 times hike over five years.
Moreover, brokers report heightened interest from Indian investors in sectors like technology, energy, and electric vehicles in China. Mayuresh Kini, co-founder of Zinc Money, mentioned a particular focus on the China Tech ETF, signaling a shift to newer markets and sectors.
Viram Shah, co-founder and CEO of Vested Finance, described this trend as investors, both institutional and retail, rotating away from overcrowded trades in the US towards regions that offer greater upside potential such as China and Brazil. He pointed out the considerable headwinds facing large-cap US tech stocks, including high valuations and geopolitical risks.
Ankita Pathak, a macro strategist at Ionic Asset, elaborated on Brazil’s appeal, citing its reasonable valuations and a recovering economic situation with limited impact from global tariffs. She referenced upgraded growth forecasts from the OECD, suggesting a favorable macroeconomic environment for potential investors
While many still view the US as a primary investment destination, experts note that a significant portion already possess extensive exposure there. “With rising tariffs and concerns regarding recession risks, some investors are actively seeking diversification in emerging markets like China and Brazil,” one analyst remarked.
Despite ongoing tensions and higher tariffs imposed by the US on China, experts maintain there is a viable story for Chinese investments moving forward. Pathak concluded, “China operates from a position of strength and numerous Chinese businesses are independent of the US market, leaning towards either domestic demand or the EU.” Overall, the investment landscape is evolving, with many poised to take advantage of changing market dynamics.
The article highlights a significant pivot in investment patterns, where Indian buyers are increasingly favoring emerging markets like China and Brazil over US equities. Amid declining US stock performance, there are attractive valuations and growing interest in specific sectors. Enhanced outbound remittances through the Reserve Bank’s liberalized remittance scheme further indicate a readiness among investors to diversify into these burgeoning markets. This shift suggests that, despite risks, opportunities exist in international equities.
Original Source: www.livemint.com
