Recently, the rise of the Chinese artificial intelligence chatbot DeepSeek has drawn significant global market attention. The model's performance is comparable to OpenAI's o1, but its training and inference costs are markedly lower than those of its American competitors. This breakthrough has not only driven a strong rebound in the Hong Kong and A-share markets but has also sparked immense investor enthusiasm for Chinese tech stocks.

The Impact of DeepSeek

The release of DeepSeek R1 marks a significant advancement for China in the field of artificial intelligence. Its open-source nature and low-cost model provide new momentum for Chinese tech companies in global competition. Compared to traditional high-cost AI development models, DeepSeek's emergence allows more enterprises to quickly implement AI technologies, thereby enhancing their market competitiveness. Analysts note that DeepSeek's success is not only a technological breakthrough but also a result of China's sustained efforts in the high-tech field, especially in the context of the "Made in China 2025" strategy.

Market Response

Influenced by DeepSeek, the Hong Kong Hang Seng Tech Index and the A-share ChiNext Index have both shown strong performance recently. The Hang Seng Tech Index has increased by over 20% in just a few weeks, while the ChiNext Index has also surged, reflecting a strong bullish sentiment towards Chinese tech stocks. Companies like Xiaomi, Lenovo, and Li Auto have been the main drivers of this upward trend. With the Federal Reserve's interest rate cuts and domestic monetary stimulus policies providing liquidity support, the Hong Kong market, as a primary gateway for foreign investment into China, has attracted significant interest from hedge funds and asset management institutions. Traders generally believe that Chinese tech stocks have performed well against the backdrop of lower-than-expected U.S. tariffs, further supporting the market's recovery.

Investor Outlook

The optimistic sentiment among investors regarding the Chinese stock market inevitably brings to mind the "bull market frenzy" in U.S. stocks during 2023. Institutions such as Goldman Sachs and Deutsche Bank have reaffirmed their bullish outlook on the Chinese market, suggesting that as technologies like DeepSeek rise, the valuation discount of Chinese stocks will gradually disappear. Goldman Sachs predicts that the MSCI China Index may rise by 14% in 2023, with an optimistic scenario potentially reaching 28%. Furthermore, the low-cost AI model technology path led by DeepSeek is expected to reduce costs across the entire AI industry chain, creating substantial market opportunities. In particular, internet giants like Alibaba and Tencent are poised to capture a larger market share in AI applications going forward.

The rapid development of DeepSeek not only injects new vitality into China's tech industry but also symbolizes China's ascent in the global AI arena. With technological advancements and market responses, the Chinese stock market may witness a new long-term bull market in the future. Investors should closely monitor developments in this area and seize potential investment opportunities. The AI boom in China, much like the historical "Sputnik moment," could become a crucial opportunity for global investors to reassess the Chinese market.

How to Trade on uSMART

After logging into the uSMART HK APP, click on the search icon at the top right of the screen. Enter the stock code, such as "00700.HK" to access detailed information, trading history, and trends. Click the “Trade” button at the bottom right, select the “Buy/Sell” function, and submit your order after filling in the transaction conditions.

（Source: uSMART HK）