DeepSeek Drives $1.3 Trillion China Stock Rally as Funds Pile In

By Investor Empires On Feb 16, 2025

(Bloomberg) – Deepseek penetration in artificial intelligence helps to push the rotation of stock boxes to China from India.

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The hedge funds were accumulating to Chinese stocks in the fastest frequency in months, adding the rise in the technological gathering that Deepseek is to hope for more economic motivation. On the contrary, India suffers from standard cash migration on concerns about the decline in macro growth, slowing the profits of companies and evaluating expensive stocks.

China's stock markets in China added more than $ 1.3 trillion of total value in the past month only amid such a re -customization, while the India market shrunk by more than 720 billion dollars. The MSCI China index is going on the right track of its Indian counterpart for a third month in a row, the longest series of this in two years.

“China has already has companies that form a vital part of the entire male ecosystem,” said Ken Wong, an Asian stock portfolio at Eastspring Investments. Deepseek has shown. His company has been adding Chinese internet possessions over the past few months, while reducing the smaller Indian stocks that “go beyond the complications of evaluation.”

The rotation is a face of almost a face from the axis to India, which has been seen over the past few years, attracting money away from China. This was based on the pride of spending on the infrastructure in India and its capabilities as an alternative center for manufacturing for China. India, which focuses on the home, has also been considered a relative haven amid the tariff plans belonging to Donald Trump.

China is looking to restore its previous attractiveness to a basic reassessment of its investment, especially in technology. After intimidating investors who have been holding companies not long ago, Beijing may actually help pushing the new artificial intelligence issue, and news indicated that entrepreneurs, including Alibaba Group Hold.

Vivek Dhawan, the director of the fund at Candriam, said the developments related to Deepseek are likely to help increase the Chinese economy as well as its markets, providing an extended batch. “If you assemble all the pieces together, China becomes more attractive than India in the current setting on the basis of risk bonus.”

The evaluation differentiation also adds to China's attractiveness. The MSCI China index is traded with profit estimates only 11 times forward, compared to about 21 times for the MSCI India index.

Bloomberg data on regional allocations by some of the largest active Asian stock funds shows that most of them reduce exposure to Indian stocks and add Chinese stocks in recent months.

While Deepseek helped accelerate the flows to China, the next possible ads for more Chinese motivation are still important, according to Andro Swan, the former president of Asia and Japan's shares in the Man Group.

Swan said: “We believe that policy will now turn towards consumption, and a targeted attempt to encourage the high levels of the savings that will be published now,” Swan said. The former Man Asia stock fund in Japan, which is run by Chinese exposure, increased to 40 % of 30 % last year, while reducing India's exposure to 18 % of 21 %.

It is unlikely that there is a complete reflection of the funds of the boxes, as Morgan Stanley says that the last correction may be late and that the long -term growth story in the country is still intact.

Meanwhile, the additional definitions imposed by Trump reinforced by Trump the neutral position of Emandi Sa on Chinese stocks, according to investment strategies in Asia Aidan Yao. “Although the truce is possible as the two sides converge in commercial talks, external dynamics will remain liquid and the challenge of China in the foreseeable future.”

There are also doubts between the merchants who were burned by the failed China gatherings in the past. Some have pointed to crowded trading and increased assessments as a caution.

You see Helen Zhou, chief investment official at Nan Fun Tinity HK Ltd. , Uncertainty about whether Deepseek can be repeated from artificial intelligence. She said: “At the end of the day, you don't really know what are the potential opportunities for income in the medium term.”

However, there is a clear sensation in the “back of China” in late markets. The positives continue to accumulate, as alibaba adds $ 100 billion in the market value over the past five weeks and the Hang Seng Tech Index, which enters the bull market.

“Deepseek news was a good timing incentive and influenced that the market participants were able to build a case to re -enter the Chinese markets,” said Nicole Wong, director of the portfolio at Manulife Investment Management.

-With the help of Chiranjivi Chakraborty, Abhishek Vishnoi, Mary Nicola and Joanne Wong.

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