In a surprising shift of sentiment, analysts are signaling a more bullish outlook on Chinese equities over Indian stocks for the next year. According to Bloomberg’s compilation of analyst estimates, the Hang Seng China Enterprises Index (HSCEI) is expected to deliver over 25% returns in the next 12 months — more than double the projected gains for India’s NSE Nifty 50 Index.
What’s Driving the Optimism Toward China?
At the core of this forecast is earnings performance — a critical factor for long-term investors. The 12-month forward consensus earnings estimate for the HSCEI has climbed 4.4% so far in 2025, signaling growing confidence in the earnings potential of Chinese companies.
In contrast, the same forward-looking earnings estimate for India’s Nifty 50 has declined, pointing to concerns about future profitability or potential overvaluation after a prolonged bullish run in Indian markets.
The Valuation Gap
Valuation also plays a role in this recalibration. Chinese equities have been trading at steep discounts relative to their global and regional peers, especially after years of underperformance driven by regulatory crackdowns, property sector turmoil, and geopolitical uncertainty. With signs of stabilization and renewed policy support, some investors see China as a high-reward, selectively de-risked opportunity.
India, on the other hand, has enjoyed a multi-year rally fueled by strong domestic consumption, political stability, and consistent economic growth. While the fundamentals remain solid, current valuations suggest limited upside in the near term — especially when weighed against rising global uncertainties and inflationary pressures.
Risk and Reward: A Balanced View
Of course, the China vs. India investment narrative isn’t just about numbers. China’s geopolitical tensions with the U.S., unresolved property sector issues, and occasional regulatory unpredictability still cast a shadow over market sentiment. Meanwhile, India’s long-term growth story, backed by demographics and structural reforms, continues to draw foreign capital.
But for investors with a 12-month investment horizon, the numbers are leaning toward China. The potential for a strong earnings rebound and market re-rating make Chinese equities particularly appealing in a global landscape short on bargains.
Final Thoughts
Markets can shift quickly, and no prediction is guaranteed. However, the current alignment of earnings momentum, valuation support, and analyst optimism puts China back in the spotlight for global investors. India remains a strong long-term bet, but China might just be the contrarian winner in the year ahead.
