AI-Driven Stock Rally in China Draws Wall Street Support
Strategists from Morgan Stanley, JPMorgan Chase & Co., and UBS Group AG anticipate the recent stock gains fueled by DeepSeek's AI model to continue. This newfound tech prowess is challenging assumptions about China's lagging behind in cutting-edge technologies.
Global investors are reassessing investment opportunities in China's tech and AI sectors after a period of limited attention. The MSCI China Index has significantly outperformed its Asian peers since January. Chinese tech stocks listed in Hong Kong have entered a bull market.
Buy-side action has been spurred by this optimism, with hedge funds and managers like Fidelity International showing interest. Despite ongoing trade tensions, the AI hype has helped offset downside pressure.
UBS strategists believe that DeepSeek may only be halfway through its rally, supported by ample liquidity and lower interest rates. This upbeat sentiment contrasts with previous cautiousness expressed by global banks.
Morgan Stanley's Wang warns of performance divergence between tech and non-tech companies, with the latter facing deflationary pressure. JPMorgan's Batra notes positive fund flows into Chinese internet names, particularly following the DeepSeek breakthrough.
Strategists view this as an opportunity for tactical rallies in China over the coming months.