DeepSeek’s AI Breakthrough Fuels Chinese Stock Surge

DeepSeek’s breakthrough in artificial intelligence is driving a significant rotation of stock funds from India to China. Hedge funds are rapidly investing in Chinese equities, bolstered by optimism surrounding DeepSeek-driven tech advancements and potential economic stimulus.

In contrast, India is experiencing a record cash outflow due to concerns over declining macro growth, slowing corporate earnings, and high stock valuations.

China’s equity markets have gained over $1.3 trillion in the past month, while India’s market has contracted by more than $720 billion.

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The MSCI China Index is on track to outperform its Indian counterpart for a third consecutive month. Ken Wong, an Asian equity portfolio specialist at Eastspring Investments, highlighted that DeepSeek’s technology shows China’s vital role in the AI ecosystem.

This shift marks a reversal from the recent pivot to India, driven by its infrastructure spending and potential as an alternative manufacturing hub to China.

With potential further Chinese stimulus on the horizon, experts believe China offers a more attractive risk-reward profile compared to India.

Business Standard