On the first trading day after the Spring Festival in 2025, the internal investment research meeting of a fund company in Shanghai will be held as scheduled. In the conference room, fund managers, researchers, and strategists sat together. On the projection screen, the LOGO of the large domestic model DeepSeek is particularly eye-catching.

In fact, during the Spring Festival, major brokerages have been busy issuing DeepSeek-related research reports and carrying out online roadshows; There are also fund companies that organize fund managers to understand relevant investment research information and deploy research plans.

DeepSeek, a breakthrough model, was launched in late January, breaking the West's inherent perception of artificial intelligence (AI) technology monopoly with its low-cost, high-efficiency, and open-source characteristics, and quickly detonated around the world. On January 27, U.S. technology stocks such as Nvidia (NV-DA.O) fell sharply, once setting a new record for a single-day market value loss in the history of the U.S. stock market.

Funds poured into Chinese concept stocks, as well as the technology sector of the A-share and Hong Kong stock markets on the other side of the ocean. Chinese assets are seen differently.

From January 27 to February 13, the Nasdaq China Golden Dragon Index, which tracks the stock performance of Chinese companies listed in the United States, rose by 10.32%, the Wind China Concept 100 Index rose by 10.88%, and the Wind China Concept Technology Leading Index rose by 15.68%.

From January 27 to February 14, the Hang Seng Tech Index rose by 18.65%; It rose by more than 23% during the year, leading the world; In the A-share market, the Wind DeepSeek index rose by 64.57% cumulatively, and concept stocks also rose collectively. Led by technology stocks, the Shanghai Composite Index rose 15.00%, the Shenzhen Component Index rose 22.68%, and the ChiNext Index rose 31.67% over the same period.

Market sentiment is running high, and investors are gearing up.

"2025 will be a crucial year for the global investment community to recognise China's international competitiveness. As Chinese companies continue to build global advantages in cost-effectiveness and quality in high-end manufacturing and services, China's disruptive innovation is reshaping the industrial competition landscape, and it is expected that the 'valuation discount' of Chinese stocks will gradually disappear. Peter Mil-liken, head of corporate research at Deutsche Bank Asia Pacific, said in his China equity research strategy report. This report has attracted a lot of attention from investors.　　　　Previously, valuations of Chinese assets had been low for a long time, especially in technology stocks. The proportion of foreign investors in Chinese assets is low, and the market generally believes that there is a "valuation discount" phenomenon in Chinese stocks.

The emergence of DeepSeek and the shock wave it brought about drove the revaluation of China's assets. Since February, foreign institutions such as Goldman Sachs, UBS, Deutsche Bank, and Morgan Stanley have begun to re-examine the valuations of Chinese companies, especially technology companies with core technological innovations, and are bullish on the Chinese market. Deutsche Bank said that 2025 is the year that China will outperform other countries, and it is expected that the "valuation discount" of Chinese equities will disappear and the A-share/Hong Kong stock bull market will continue and surpass previous highs.

China's assets are in the midst of a revaluation.

Tech stocks soared

The debut of DeepSeek instantly ignited the enthusiasm of funds for the technology sector in the A-share and Hong Kong stock markets.

Since the beginning of the year to February 13, Alibaba (BABA.N), BYD shares-ADR (by-ddy.oo), Xiaomi Group-ADR (xiacy.oo), Pinduoduo (PDD.O), NetEase (NTES.O), JD.O Group, and Tencent Group-ADR (TCEHY.oo) have increased by 39.56%, 34.71%, 30.88%, 22.52%, 22.34% respectively. 10.71%、8.07%。

From February 5 to February 12, Wind data shows that the DeepSeek Concept Index has risen for 6 consecutive trading days, with a cumulative increase of more than 45%. Daily interaction of related concept stocks (300766. SZ), Parallel Technology (839493. BJ), Qingyun Technology (688316. SH) and many other stocks have risen by more than 200% for 6 consecutive trading days.

The announcement of the change issued by these three stocks all mentioned the response to being listed as a DeepSeek concept stock. The relevant response content is generally that DeepSeek is an open-source large language model, and any user can carry out training work based on this model for free, and some of the company's products are connected to DeepSeek, but there is uncertainty about the impact on business performance, and it is clarified that there is no equity relationship with DeepSeek and High-Flyer Technology Company behind DeepSeek.

In addition to DeepSeek concept stocks, some technology sectors are also sought after by funds. Wind data shows that from February 5 to February 14, the AI wearable device index, humanoid robot index, and AI mobile phone index rose by 11.41%, 8.91%, and 9.25% respectively.

Since February, technology stocks have performed outstandingly, especially those related to artificial intelligence. As of February 14, the Hang Seng Tech Index has risen by 16.99%. From February to the 13th, the Nasdaq China Technology Index has risen by 14.77%, while the Wind US Technology Big Seven Index has risen slightly by 0.36% since the beginning of the year.

Since DeepSeek officially released the DeepSeek-R1 model on January 20 and open-sourced, Nvidia's stock price fell sharply the day before Chinese New Year's Eve, from a high of $148 to $116; It has rebounded since February, rising to around $131.

In the view of a venture capital institution in South China, previously, the technical blockade of the United States in the field of high-end computing chips has severely restricted the development of China's AI industry, and the growth ceiling of technology companies has been "locked", and the market generally believes that strong computing power is the core bottleneck of AI development. With the advent of DeepSeek, the investment logic of the AI industry is undergoing profound changes. "This breakthrough has had a huge impact on the market. On the one hand, the stock price of Nvidia, the world's leading GPU manufacturer, fell sharply after the news of DeepSeek, and investors are worried that DeepSeek's low-cost model will reduce the demand for Nvidia's high-end GPUs. On the other hand, Chinese technology companies, especially Internet cloud service companies, have seen new hope, and their development ceilings have been opened. The person said.

Rationale for revaluation

The rise of Chinese technology companies such as DeepSeek has made China's revaluation a focus in the investment space.

Driven by the wave of AI technology, U.S. technology stocks have become the target of global investors, with Nvidia (NVDA.O), Microsoft (MSFT.O), Google (GOOGL.O) and other companies hitting new highs with their leading positions in the field of artificial intelligence.

So far in 2023, the Wind U.S. Tech Big Seven Index (MAGS) has soared from 21,200 points to around 54,400 points, a cumulative increase of more than 100%.

To a certain extent, this is related to the fact that the United States has always been a leader in innovation and market layout in the field of science and technology. For example, about 65% of the global cloud computing market is controlled by U.S. companies, and platforms such as Amazon's AWS and Microsoft's Azure dominate the cloud computing space. In addition, the frequent deployment of US technology giants in emerging fields such as the metaverse and AI has further consolidated its attractiveness in the global technology market.

Funds flow to the U.S. technology sector, and Chinese tech stocks are relatively undervalued and market-focused in the AI era.

According to the research report of Huatai Securities, the changes in the valuation of the PE_TTM of the technology sector in China and the United States tended to be synchronized from mid-2020 to the end of 2022, but there has been a significant differentiation since 2023, and the valuation of U.S. technology stocks has continued to rise. As of January 31, 2025, the Nasdaq Composite Index PE_TTM is 46.1x, which is in the 89th percentile of the past 10 years, and the Hang Seng Tech Index PE_TTM is 19.6x, which is in the 43th percentile since the index's release in July 2020.

Wang Zonghao, head of equity strategy research at UBS China, said in a recent China equity strategy that the launch of the DeepSeekR1 model has brought China's AI development back to investors' attention. Technology-driven rallies typically keep stock prices rising before earnings materialize, and this year AI-related stocks have the opportunity to rise in valuations due to ample liquidity and lower interest rates.

Wang Zonghao believes that for the broader market, as technology stocks account for 12% to 20% of the index, AI may bring some upside potential in valuation; Historically, A-share theme stocks have risen more than Hong Kong stocks.

Goldman Sachs released a research report saying that the rise of DeepSeek has brought an opportunity for the revaluation of the value of Chinese technology stocks in the medium to long term, and maintained an overweight rating on the MSCI China Index.

Yang Jingyu, senior fund manager of J.P. Morgan Asset Management China, said that DeepSeek is not an accidental event that fell from the sky, it is a successful case in line with the logic of industrial development, and its success once again proves that China is one of the most important industrial innovation bases in the world, and more innovative achievements may emerge in the future, and the value of China's technology-based enterprises may continue.

Thanks to the structural shift in policy focus to the consumption side and the favorable financial opening policy, Malqin believes that the bull market cycle of China's A-share and Hong Kong stocks has started in 2024 and is expected to reach new highs in the medium term.

In the view of Wang Guizhong, director of big technology research and fund manager of Harvest Fund, behind the frequent long-term growth of foreign capital, to a certain extent, it also reflects the optimistic attitude towards Chinese assets, especially technology assets. At present, the construction of China's modern industrial system is accelerating, and the vitality, innovation and competitiveness embodied in the new quality of productivity are becoming more and more prominent. To develop new quality productivity, scientific and technological innovation is the core driving force; Artificial intelligence is one of the key elements in cultivating new quality productivity.

From the perspective of the revaluation of the industrial chain, Huaan Fund believes that AI is the commanding heights of global technology competition, and the DeepSeek breakthrough may change (improve) the global valuation system of China's technology industry, and its key areas include: semiconductor industry chain, China's current high-end semiconductor manufacturing industry chain can better enter the training/reasoning/end-side field; The large-scale model industry, including cloud vendors operating model businesses, as well as independent large-scale model companies, and software/media companies that apply and import their products; Terminal industries such as smart phones, smart glasses, and intelligent driving are themselves industries with China's industrial specialties, and they are currently benefiting more from the breakthroughs of domestic model companies such as DeepSeek.

Foreign capital is adding to its position

While foreign institutions are bullish on Chinese assets, investors are paying more attention to what foreign investors are doing.

Wind data shows that since 2025, A-share listed companies have frequently been surveyed by foreign institutions. Among them, Inovance Technology (300124. SZ) received the largest number of foreign investment surveys, with 56 times; Roborock (688169. SH), Montage Technology (688008. SH) obtained 49 and 44 surveys of foreign investment, respectively.

From the perspective of foreign-funded institutions, Morgan Stanley, UBS, GIC, Citigroup, HSBC Investments, Deutsche Bank and BNP Paribas frequently appear in the research list of A-share listed companies.

On February 10, Eastern time, AppaloosaLP, a subsidiary of American hedge fund tycoon and billionaire investor David Tepper, filed a Form 13-F filing with the SEC. According to the filing, in the fourth quarter of 2024, the hedge fund increased its holdings of China concept stocks and China equity ETFs (exchange-traded index funds) across the board.

Specifically, Appaloosa's stake in Alibaba increased by 18% to 11.8 million shares, which are now worth more than $1.2 billion (about 8.8 billion yuan). As of the end of 2024, Alibaba is its largest holding, accounting for about 15.40% of its portfolio.

The leading domestic public fund companies have recently become more and more active in the layout of technology assets.

Wang Guizhong, director of big technology research and fund manager of Harvest Fund, told the Economic Observer that out of optimism about the investment value of technology stocks, Harvest Fund significantly increased the allocation of hard technology in the fourth quarter of last year and increased some domestic computing power in AI. On the application side, automotive intelligence is a relatively clear landing scenario, especially the major new energy vehicle manufacturers led by Chinese brands have increased their investment, so that they can see the prospect of AI business closed-loop, so Harvest Fund has also increased the corresponding positions under this clue and reduced the positions in other industries.

"In recent years, the main line of technology has been there, but the valuations of some individual stocks have been very high before, so I 'cut' some positions at the end of last year. Because of the outbreak of DeepSeek, I still added some positions after the holiday. A brokerage company is a public offering investment research source.

A fund manager of a small and medium-sized technology growth fund in Beijing said that DeepSeek suddenly exploded before the Spring Festival holiday, so he spent the whole holiday learning about DeepSee and its underlying logical differences with ChatGPT. However, he believes that there is a game and speculation in the short-term related sectors, and he will not carry out large-scale operations on his positions for the time being, and wait for the game to be sufficient.

Opportunities for positive feedback

As an important innovation in the current AI field, DeepSeek is rapidly implementing and attracting widespread attention. According to incomplete statistics, as of February 10, 2025, hundreds of listed companies have announced their access to DeepSeek, covering multiple industries such as finance, healthcare, technology, and automobiles.

In the financial sector, a number of securities firms, such as Guotai Junan, GF Securities, China Securities Construction Investment, and Everbright Securities, have completed the localized deployment of DeepSeek-R1 or DeepSeek-V3 models, which are applied to scenarios such as market monitoring, investment research, intelligent customer service, code generation assistance, and intelligent investment research.

In the medical industry, Hengrui Pharmaceutical plans to fully carry out the application of DeepSeek within the company; Genor Mecan has been connected to DeepSeek, is training in the professional field, and plans to upgrade medical AI applications.

In the technology and service industry, iFLYTEK has launched all DeepSeek large models on its iFLYTEK open platform, which supports public cloud API calls and exclusive model deployment. Tors focuses on natural language processing, which intersects with DeepSeek in the commercialization of NLP technology.

DeepSeek is widely used and is driving the intelligent transformation of many industries, with finance, healthcare, technology and other fields becoming the first beneficiaries.

The revaluation of China's technology assets is not just a short-term adjustment, but a ripple effect with far-reaching significance. It will bring continuous positive feedback to the future, driving the revaluation and improvement of asset value.

Can DeepSeek Drive China's Stocks Higher?

Wang Zonghao, head of equity strategy research at UBS China, believes that based on the experience of the 4G, 5G and cloud computing led the rally, it can be seen that the MSCI China index has risen by an average of 50% from the bottom to the high, and the CSI 300 index has risen even more, with an average increase of 72%. However, UBS believes that it is necessary to be cautious about extrapolating these historical lessons, as the subsequent rally in equities has been largely driven by the macro recovery. In the early stages of the 4G rally from 2013 to 2014, the stock market was largely flat, while in the first half of 2023, AI-related stocks continued to perform well before a correction.

"At present, looking at the industry composition of Hong Kong stocks and A-shares, the exposure of software and hardware companies in A-shares (CSI 300 Index) is larger (about 20%), while Hong Kong stocks (Hang Seng China Enterprises Index) exclude Internet giants, and the proportion of related stocks is relatively low, at 12%. With the Hang Seng China Enterprises Index outperforming the CSI 300 Index by 10% year-to-date, UBS believes that A-shares may be a better choice for AI-related themes. Wang Zonghao said.

The above-mentioned Shanghai fund company listed the hottest "DeepSeek" and "Nezha" related concept stocks during the Spring Festival as the main line. However, most fund managers believe that Nezha has more impact on the market's sentiment and the market sustainability is conservative, but the application of DeepSeek will be more diversified.

A fund manager of the company revealed that the main line of the restless market in the spring of 2025 has determined the direction of AI, but this meeting will focus more on the AI technology companies represented by DeepSeek and their industrial chains in the artificial intelligence track.

A researcher said at the seminar that the current valuation of DeepSeek-related stocks is indeed not low, but considering the technological leadership and the potential for future commercialization, he still believes that there is room for attractiveness in the current valuation, especially the breakthrough that DeepSeek is expected to bring in autonomous driving, which may open up new growth space.

Amid the hustle and bustle in the technology sector investment sector, many investment institutions remain cautious.

Some fund managers raised questions about whether market sentiment has been overheated and the current valuation level of DeepSeek-related stocks.

Wang Guizhong believes that the value creation of enterprises is the main source of investment income, and whether the AI market can be sustainable depends on whether the industry can truly achieve value creation. The strong rise of this round of AI models has, to a certain extent, made people really feel that with the hard work of generations of Chinese science and technology workers and ordinary people, technology has really shone into reality, investors have more confidence, and it has also been reflected in the capital market, driving the technology sector upward.

Wang Guizhong emphasized that science and technology investment is a veritable "difficult but correct" "long slope and thick snow", and the value of medium and long-term investment can be called "a sea of stars", full of infinite possibilities. Harvest Fund has observed that China's technology manufacturing industry is getting stronger and stronger, and there have been significant breakthroughs in domestic computing power, advanced semiconductor manufacturing processes, and high-end intelligent driving of automobiles.