DeepSeek Sparks AI Revolution in Chinese Fund Management Industry

Chinese retail traders embrace DeepSeek in a nod to quants

SHANGHAI/SINGAPORE, March 11 (Reuters) - If you cannot fight them, join them, is the mantra among Chinese mom-and-pop investors who are embracing DeepSeek and other artificial intelligence tools, in sharp contrast with last year's government crackdown on computer-driven quantitative traders. Online crash courses have mushroomed and training rooms are packed with retail traders eager to beat the market using computer models, as the popularity of DeepSeek - itself backed by a quant fund - changed not only the market trajectory, but the perception of China's $700 billion hedge fund industry. The rapid adoption of DeepSeek in China's retail-dominated stock market is also prompting changes at brokerages and wealth managers, while creating new risks for investors in a market dominated and driven by small-time traders' cash flow. "The future is the digital age, and AI will be vital," Hong Yangjun told a packed room of individual investors learning to trade with AI on a weekend in February. Just as future warfare will be fought with drones and robots, the stock market will be a battleground between computers, the lecturers told the class in an office in downtown Shanghai. Such piety is in stark contrast to the public outcry a year ago against computer-driven quant funds, viewed as "bloodsuckers" by retail investors, and blamed by regulators for contributing to market unfairness and volatility. The industry was also the target of a government crackdown roughly a year ago, when the sector was worth $260 billion by some estimates. Last month, however, investors handed over 15,800 yuan ($2,179.91) each for a weekend lecture by Mao Yuchun, founder of Alpha Squared Capital, on how to trade stocks with AI, according to the organiser, who promoted the event by drawing attention to Alpha Squared's geographical affinity with High-Flyer. High-Flyer, based in eastern Hangzhou, is the hedge fund behind DeepSeek - the Chinese AI start up that stunned Silicon Valley with its cost-efficient large language model and spurred a rally in Chinese stocks. Meanwhile, Chinese social media is brimming with online courses teaching traders how to use DeepSeek to evaluate companies, pick stocks, and code trading strategies. "Using quantitative tools to pick stocks saves a lot of time," said Wen Hao, a Hangzhou-based trader. "You can also use DeepSeek to write codes," said Wen, who uses computer programs to determine the timing for buying and selling. U.S. fund giants including BlackRock, Renaissance Technologies and Two Sigma have already been using AI in investing for some time. Analysts say small asset managers and even retail investors in China stand to benefit from the emergence of DeepSeek's open-sourced model. ChatGPT is off-limits to Chinese users. DEEPSEEK ADVICE The fondness for the AI-led turnaround in the perception of quant trading has coincided with a sunny start to the year for stocks, after a few years in the doldrums. Goldman Sachs said the MSCI China index (.dMICN00000PUS), opens new tab has made its best start of the year in history and brokers are racing to build AI models into their platforms. "In the future, Chinese investors will completely change the way they make investment decisions and place orders," said Zhou Lefeng, president of Xiangcai Securities. "Previously, clients would ask wealth managers for investment advice. Now they ask DeepSeek." Larry Cao, principal analyst at FinAI Research, said DeepSeek is popular because it's cost-efficient, has strong reasoning ability, and unlike ChatGPT, is readily available, and is promoted by the Chinese government. Nevertheless, he is surprised at the level of faith investors put in the model, cautioning that AI has limits. "People trust AI models more than they trust financial advisers, which is probably misplaced trust at least at this stage," Cao said. There could also be a herding effect if one school trains many retail investors to trade using the same signal. "Large language models seem impressive. But at this stage, they are not necessarily smarter than most investors." What's certain, said Feng Ji, CEO of Baiont Quant, is that DeepSeek has changed retail perception of quant fund managers. "I can feel strongly that the public are thinking twice about quant fund managers' contributions to society," said Feng, whose company uses machine learning to trade. "I never think we caused retail investors' losses. We actually provide liquidity and make the market more efficient." ($1 = 7.2480 Chinese yuan renminbi) Reporting by Samuel Shen and Tom Westbrook Editing by Shri Navaratnam Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Future of Money Tom Westbrook Thomson Reuters Tom reports from Singapore on financial markets in Asia, filing daily market reports and deeper pieces on stock, bond and foreign exchange trade. He contributes to the Morning Bid newsletter. He was previously a company and general news correspondent in Sydney and a reporter for News Ltd.

After DeepSeek, Chinese fund managers beat High-Flyer's path to AI

SHANGHAI/SINGAPORE, March 14 (Reuters) - Chinese hedge fund High-Flyer's use of artificial intelligence in trading markets has spurred an AI arms race among mainland asset managers that could shake up the country's $10 trillion fund management industry. Quant fund High-Flyer not only deployed AI in its multi-billion dollar portfolio, it also built China's most notable AI start-up DeepSeek whose cost-effective large language model stunned Silicon Valley and undermined Western dominance of the AI sector. In its wake, aspiring Chinese hedge fund managers such as Baiont Quant, Wizard Quant and Mingshi Investment Management are stepping up AI research, while dozens of mutual fund companies are rushing to incorporate DeepSeek into their investment workflow. "We are in the eye of the storm" of an AI revolution, said Feng Ji, chief executive of Baiont Quant, which uses machine learning to trade markets with no human intervention. "Two years ago, many fund managers would look at us AI-powered quants with mockery or disbelief," said Feng. "Today, these sceptics could be out of business if they don't embrace AI." Most of these funds use AI to process market data and generate trading signals based on their investors' risk profiles, rather than produce DeepSeek-like models. And as more home-grown versions of U.S. systematic trading firms such as Renaissance Technologies and D.E.Shaw are born, fund managers expect competition for "alpha", or outperformance, to intensify. Wizard Quant advertised last month to recruit top AI researchers and engineers for a lab to "reshape the future of science and technology". Demand for coding talent is heating up. Mingshi said its Genesis AI Lab is hiring computer scientists to support research and investment. In a recent roadshow, asset manager UBI Quant told investors it had already set up an AI lab several years ago to explore the use of AI in investment and elsewhere. The race to generate better trading strategies using AI requires huge computing power and high-performance chips, and local authorities said they are ready to help. For example, the government of the southern city of Shenzhen has vowed to raise 4.5 billion yuan ($620.75 million) to subsidise hedge funds' consumption of computing power, in support of their AI development. DEEPSEEK SCRAMBLE China's mutual fund industry is also scrambling to embrace AI. More than a score of retail fund companies, including China Merchants Fund, E Fund and Dacheng Fund, have completed local deployment of DeepSeek. The open-sourced, low-cost large language model has "greatly lowered the bar for AI applications" for the mutual fund industry, said Hu Yi, vice general manager of intelligent equity investment at Zheshang Fund Management. Zheshang Fund has embedded DeepSeek into its AI platform and is developing AI agents to boost efficiency of research and investment. For example, AI agents will do most of the work of junior analysts today, such as monitoring market signals and writing daily comments, "forcing humans to do more creative things," Hu said. "Before DeepSeek, AI had mostly been the realm of top tier players given the cost, talent, and technology required" but DeepSeek had "levelled the playing ground for Chinese fund managers, which are smaller than their U.S. counterparts," said Larry Cao, Principal Analyst at FinAI Research. Baiont's Feng said AI's rapid advancement offers late comers to investment management the opportunity to challenge bigger incumbents. "A seasoned fund manager may have accumulated 20 years of experience, but with AI, one can acquire that experience in two months using 1,000 GPUs," said Feng, whose five-year-old fund company currently manages 6 billion yuan, eclipsing many older rivals. ($1 = 7.2493 Chinese yuan renminbi) Reporting by Samuel Shen in Shanghai and Vidya Ranganathan in Singapore; Editing by Christopher Cushing Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Artificial Intelligence Vidya Ranganathan Thomson Reuters Vidya heads global finance & markets breaking news, overseeing dozens of reporters across the world who cover spot currency, bond, stock & crypto market developments and other fund flows, investor activity, govt policies and corporate actions that impact markets. She also writes and edits markets insights on emerging Asia, with a keen interest in China, and anchors the Cryptoverse column. Vidya has spent 3 decades covering markets, and was previously a trader at Societe Generale. She believes in life-long learning and training, and is now adding Gen AI courses to her masters degree in Physics, MBA and post-grad diploma in applied finance & securities markets.

Chinese Retail Traders Embrace DeepSeek in a Nod to Quants

SHANGHAI/SINGAPORE (Reuters) - If you cannot fight them, join them, is the mantra among Chinese mom-and-pop investors who are embracing DeepSeek and other artificial intelligence tools, in sharp contrast with last year's government crackdown on computer-driven quantitative traders. Online crash courses have mushroomed and training rooms are packed with retail traders eager to beat the market using computer models, as the popularity of DeepSeek - itself backed by a quant fund - changed not only the market trajectory, but the perception of China's $700 billion hedge fund industry. The rapid adoption of DeepSeek in China's retail-dominated stock market is also prompting changes at brokerages and wealth managers, while creating new risks for investors in a market dominated and driven by small-time traders' cash flow. "The future is the digital age, and AI will be vital," Hong Yangjun told a packed room of individual investors learning to trade with AI on a weekend in February. Just as future warfare will be fought with drones and robots, the stock market will be a battleground between computers, the lecturers told the class in an office in downtown Shanghai. Such piety is in stark contrast to the public outcry a year ago against computer-driven quant funds, viewed as "bloodsuckers" by retail investors, and blamed by regulators for contributing to market unfairness and volatility. The industry was also the target of a government crackdown roughly a year ago, when the sector was worth $260 billion by some estimates. Last month, however, investors handed over 15,800 yuan ($2,179.91) each for a weekend lecture by Mao Yuchun, founder of Alpha Squared Capital, on how to trade stocks with AI, according to the organiser, who promoted the event by drawing attention to Alpha Squared's geographical affinity with High-Flyer. High-Flyer, based in eastern Hangzhou, is the hedge fund behind DeepSeek - the Chinese AI start up that stunned Silicon Valley with its cost-efficient large language model and spurred a rally in Chinese stocks. Meanwhile, Chinese social media is brimming with online courses teaching traders how to use DeepSeek to evaluate companies, pick stocks, and code trading strategies. "Using quantitative tools to pick stocks saves a lot of time," said Wen Hao, a Hangzhou-based trader. "You can also use DeepSeek to write codes," said Wen, who uses computer programs to determine the timing for buying and selling. U.S. fund giants including BlackRock, Renaissance Technologies and Two Sigma have already been using AI in investing for some time. Analysts say small asset managers and even retail investors in China stand to benefit from the emergence of DeepSeek's open-sourced model. The fondness for the AI-led turnaround in the perception of quant trading has coincided with a sunny start to the year for stocks, after a few years in the doldrums. Goldman Sachs said the MSCI China index has made its best start of the year in history and brokers are racing to build AI models into their platforms. "In the future, Chinese investors will completely change the way they make investment decisions and place orders," said Zhou Lefeng, president of Xiangcai Securities. "Previously, clients would ask wealth managers for investment advice. Now they ask DeepSeek." Larry Cao, principal analyst at FinAI Research, said DeepSeek is popular because it's cost-efficient, has strong reasoning ability, and unlike ChatGPT, is readily available, and is promoted by the Chinese government. Nevertheless, he is surprised at the level of faith investors put in the model, cautioning that AI has limits. "People trust AI models more than they trust financial advisers, which is probably misplaced trust at least at this stage," Cao said. There could also be a herding effect if one school trains many retail investors to trade using the same signal. "Large language models seem impressive. But at this stage, they are not necessarily smarter than most investors." What's certain, said Feng Ji, CEO of Baiont Quant, is that DeepSeek has changed retail perception of quant fund managers. "I can feel strongly that the public are thinking twice about quant fund managers' contributions to society," said Feng, whose company uses machine learning to trade. "I never think we caused retail investors' losses. We actually provide liquidity and make the market more efficient." ($1 = 7.2480 Chinese yuan renminbi) (Reporting by Samuel Shen and Tom Westbrook; Editing by Shri Navaratnam)

After DeepSeek, Chinese Fund Managers Beat High-Flyer's Path to AI

SHANGHAI/SINGAPORE (Reuters) - Chinese hedge fund High-Flyer's use of artificial intelligence in trading markets has spurred an AI arms race among mainland asset managers that could shake up the country's $10 trillion fund management industry. Quant fund High-Flyer not only deployed AI in its multi-billion dollar portfolio, it also built China's most notable AI start-up DeepSeek whose cost-effective large language model stunned Silicon Valley and undermined Western dominance of the AI sector. In its wake, aspiring Chinese hedge fund managers such as Baiont Quant, Wizard Quant and Mingshi Investment Management are stepping up AI research, while dozens of mutual fund companies are rushing to incorporate DeepSeek into their investment workflow. "We are in the eye of the storm" of an AI revolution, said Feng Ji, chief executive of Baiont Quant, which uses machine learning to trade markets with no human intervention. "Two years ago, many fund managers would look at us AI-powered quants with mockery or disbelief," said Feng. "Today, these sceptics could be out of business if they don't embrace AI." Most of these funds use AI to process market data and generate trading signals based on their investors' risk profiles, rather than produce DeepSeek-like models. And as more home-grown versions of U.S. systematic trading firms such as Renaissance Technologies and D.E.Shaw are born, fund managers expect competition for "alpha", or outperformance, to intensify. Wizard Quant advertised last month to recruit top AI researchers and engineers for a lab to "reshape the future of science and technology". Demand for coding talent is heating up. Mingshi said its Genesis AI Lab is hiring computer scientists to support research and investment. In a recent roadshow, asset manager UBI Quant told investors it had already set up an AI lab several years ago to explore the use of AI in investment and elsewhere. The race to generate better trading strategies using AI requires huge computing power and high-performance chips, and local authorities said they are ready to help. For example, the government of the southern city of Shenzhen has vowed to raise 4.5 billion yuan ($620.75 million) to subsidise hedge funds' consumption of computing power, in support of their AI development. DEEPSEEK SCRAMBLE China's mutual fund industry is also scrambling to embrace AI. More than a score of retail fund companies, including China Merchants Fund, E Fund and Dacheng Fund, have completed local deployment of DeepSeek. The open-sourced, low-cost large language model has "greatly lowered the bar for AI applications" for the mutual fund industry, said Hu Yi, vice general manager of intelligent equity investment at Zheshang Fund Management. Zheshang Fund has embedded DeepSeek into its AI platform and is developing AI agents to boost efficiency of research and investment. For example, AI agents will do most of the work of junior analysts today, such as monitoring market signals and writing daily comments, "forcing humans to do more creative things," Hu said. "Before DeepSeek, AI had mostly been the realm of top tier players given the cost, talent, and technology required" but DeepSeek had "levelled the playing ground for Chinese fund managers, which are smaller than their U.S. counterparts," said Larry Cao, Principal Analyst at FinAI Research. Baiont's Feng said AI's rapid advancement offers late comers to investment management the opportunity to challenge bigger incumbents. "A seasoned fund manager may have accumulated 20 years of experience, but with AI, one can acquire that experience in two months using 1,000 GPUs," said Feng, whose five-year-old fund company currently manages 6 billion yuan, eclipsing many older rivals. ($1 = 7.2493 Chinese yuan renminbi) (Reporting by Samuel Shen in Shanghai and Vidya Ranganathan in Singapore; Editing by Christopher Cushing)

After DeepSeek, Chinese fund managers beat High-Flyer's path to AI

Chinese hedge fund High-Flyer's use of artificial intelligence in trading markets has spurred an AI arms race among mainland asset managers that could shake up the country's $10 trillion fund management industry. Quant fund High-Flyer not only deployed AI in its multi-billion dollar portfolio, it also built China's most notable AI start-up DeepSeek whose cost-effective large language model stunned Silicon Valley and undermined Western dominance of the AI sector. In its wake, aspiring Chinese hedge fund managers such as Baiont Quant, Wizard Quant and Mingshi Investment Management are stepping up AI research, while dozens of mutual fund companies are rushing to incorporate DeepSeek into their investment workflow. "We are in the eye of the storm" of an AI revolution, said Feng Ji, chief executive of Baiont Quant, which uses machine learning to trade markets with no human intervention. "Two years ago, many fund managers would look at us AI-powered quants with mockery or disbelief," said Feng. "Today, these sceptics could be out of business if they don't embrace AI." Most of these funds use AI to process market data and generate trading signals based on their investors' risk profiles, rather than produce DeepSeek-like models. And as more home-grown versions of U.S. systematic trading firms such as Renaissance Technologies and D.E.Shaw are born, fund managers expect competition for "alpha", or outperformance, to intensify. Wizard Quant advertised last month to recruit top AI researchers and engineers for a lab to "reshape the future of science and technology". Demand for coding talent is heating up. Mingshi said its Genesis AI Lab is hiring computer scientists to support research and investment. In a recent roadshow, asset manager UBI Quant told investors it had already set up an AI lab several years ago to explore the use of AI in investment and elsewhere. The race to generate better trading strategies using AI requires huge computing power and high-performance chips, and local authorities said they are ready to help. For example, the government of the southern city of Shenzhen has vowed to raise 4.5 billion yuan ($620.75 million) to subsidise hedge funds' consumption of computing power, in support of their AI development. DeepSeek scramble China's mutual fund industry is also scrambling to embrace AI. More than a score of retail fund companies, including China Merchants Fund, E Fund and Dacheng Fund, have completed local deployment of DeepSeek. The open-sourced, low-cost large language model has "greatly lowered the bar for AI applications" for the mutual fund industry, said Hu Yi, vice general manager of intelligent equity investment at Zheshang Fund Management. Zheshang Fund has embedded DeepSeek into its AI platform and is developing AI agents to boost efficiency of research and investment. For example, AI agents will do most of the work of junior analysts today, such as monitoring market signals and writing daily comments, "forcing humans to do more creative things," Hu said. "Before DeepSeek, AI had mostly been the realm of top tier players given the cost, talent, and technology required" but DeepSeek had "levelled the playing ground for Chinese fund managers, which are smaller than their U.S. counterparts," said Larry Cao, Principal Analyst at FinAI Research. Baiont's Feng said AI's rapid advancement offers late comers to investment management the opportunity to challenge bigger incumbents. "A seasoned fund manager may have accumulated 20 years of experience, but with AI, one can acquire that experience in two months using 1,000 GPUs," said Feng, whose five-year-old fund company currently manages 6 billion yuan, eclipsing many older rivals.

Chinese retail traders embrace DeepSeek in a nod to quants

SHANGHAI/SINGAPORE (Reuters) - If you cannot fight them, join them, is the mantra among Chinese mom-and-pop investors who are embracing DeepSeek and other artificial intelligence tools, in sharp contrast with last year's government crackdown on computer-driven quantitative traders. Online crash courses have mushroomed and training rooms are packed with retail traders eager to beat the market using computer models, as the popularity of DeepSeek - itself backed by a quant fund - changed not only the market trajectory, but the perception of China's $700 billion hedge fund industry. The rapid adoption of DeepSeek in China's retail-dominated stock market is also prompting changes at brokerages and wealth managers, while creating new risks for investors in a market dominated and driven by small-time traders' cash flow. "The future is the digital age, and AI will be vital," Hong Yangjun told a packed room of individual investors learning to trade with AI on a weekend in February. Just as future warfare will be fought with drones and robots, the stock market will be a battleground between computers, the lecturers told the class in an office in downtown Shanghai. Such piety is in stark contrast to the public outcry a year ago against computer-driven quant funds, viewed as "bloodsuckers" by retail investors, and blamed by regulators for contributing to market unfairness and volatility. The industry was also the target of a government crackdown roughly a year ago, when the sector was worth $260 billion by some estimates. Last month, however, investors handed over 15,800 yuan ($2,179.91) each for a weekend lecture by Mao Yuchun, founder of Alpha Squared Capital, on how to trade stocks with AI, according to the organiser, who promoted the event by drawing attention to Alpha Squared's geographical affinity with High-Flyer. High-Flyer, based in eastern Hangzhou, is the hedge fund behind DeepSeek - the Chinese AI start up that stunned Silicon Valley with its cost-efficient large language model and spurred a rally in Chinese stocks. Meanwhile, Chinese social media is brimming with online courses teaching traders how to use DeepSeek to evaluate companies, pick stocks, and code trading strategies. "Using quantitative tools to pick stocks saves a lot of time," said Wen Hao, a Hangzhou-based trader. "You can also use DeepSeek to write codes," said Wen, who uses computer programs to determine the timing for buying and selling. U.S. fund giants including BlackRock, Renaissance Technologies and Two Sigma have already been using AI in investing for some time. Analysts say small asset managers and even retail investors in China stand to benefit from the emergence of DeepSeek's open-sourced model. The fondness for the AI-led turnaround in the perception of quant trading has coincided with a sunny start to the year for stocks, after a few years in the doldrums. Goldman Sachs said the MSCI China index has made its best start of the year in history and brokers are racing to build AI models into their platforms. "In the future, Chinese investors will completely change the way they make investment decisions and place orders," said Zhou Lefeng, president of Xiangcai Securities. "Previously, clients would ask wealth managers for investment advice. Now they ask DeepSeek." Larry Cao, principal analyst at FinAI Research, said DeepSeek is popular because it's cost-efficient, has strong reasoning ability, and unlike ChatGPT, is readily available, and is promoted by the Chinese government. Nevertheless, he is surprised at the level of faith investors put in the model, cautioning that AI has limits. "People trust AI models more than they trust financial advisers, which is probably misplaced trust at least at this stage," Cao said. There could also be a herding effect if one school trains many retail investors to trade using the same signal. "Large language models seem impressive. But at this stage, they are not necessarily smarter than most investors." What's certain, said Feng Ji, CEO of Baiont Quant, is that DeepSeek has changed retail perception of quant fund managers. "I can feel strongly that the public are thinking twice about quant fund managers' contributions to society," said Feng, whose company uses machine learning to trade. "I never think we caused retail investors' losses. We actually provide liquidity and make the market more efficient." (Reporting by Samuel Shen and Tom Westbrook; Editing by Shri Navaratnam)