DeepSeek stock has spearheaded an impressive surge to a five-year high as investors exit India and pivot toward Chinese equities. Market volatility in several key regions also stems from AI breakthroughs fueling a Chinese stock rally while the Indian stock market faces economic challenges. Goldman Sachs reports Chinese stocks are now the most heavily net-bought assets in its prime brokerage book.
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Investors’ Shift to Chinese Stocks: DeepSeek’s Rise Amid Market Volatility
India’s Slowdown Drives Capital to DeepSeek Stock
India’s GDP growth dropped to 5.4% in Q3 2024, prompting the government to lower its fiscal-year projection to a mere 6.4%. The MSCI India Index has fallen over 7% this year while DeepSeek stock continues its upward trajectory amid some impressive gains in the Chinese stock rally.
Thio Siew Hua, managing director at Lion Global Investors, stated:
“Every time the China market goes up, the India market goes down. You need to sell something to fund something new, so that’s what’s happening, especially with the disappointments that we’ve seen in India.”
Nomura reports that across various major investment categories, 33% of large global EM funds are now “Overweight” on China and Hong Kong equities, up from 26% in December, as investors exit India in favor of DeepSeek stock and other Chinese assets.
DeepSeek’s AI Powers Chinese Market Surge
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DeepSeek stock gains have been powerfully catalyzed by its R1 AI model, which claims superior performance at lower costs than established players. The Hang Seng Tech Index has hit a three-year high while the MSCI China Index has climbed an impressive 26.5% from its January low amid intensifying market volatility across multiple essential trading sectors.
Alex Smith, Abrdn’s head of Equities Investment Specialists, noted:
“We saw strong [China] market moves to the upside following the launch of Deepseek.”
Experts Urge Caution on DeepSeek Stock Rally
Despite amplified enthusiasm for DeepSeek stock and the broader Chinese stock rally as investors exit India, multiple financial experts advise strategic caution. The market landscape contains several unresolved challenges including potential trade war escalation, underlying weaknesses across China’s financial system, and persistent real estate sector instability..
Nicole Wong from Manulife warned:
“It may be a little too early to say the worst is behind us in terms of seeing a sustained recovery in consumption activity in China.”
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James Liu, founder of Clearnomics, emphasized:
“Factors such as a growing trade war, recurring concerns over the Chinese financial system, the real estate bubble, and uncertainty around government stimulus will likely drive volatility in 2025.”
DeepSeek stock has spearheaded an impressive transformation to remain a focal point as investors navigate market volatility between Chinese and Indian equities. The long-term viability of this rotation really depends on economic conditions in both countries and a few important neighboring markets, along with the continued momentum of China’s AI sector amid the ongoing Chinese stock rally.
