Chinese tech stocks gain popularity among global investors thanks to DeepSeek’s rise

stock market Photo:VCG

China’s chip stocks surged on Wednesday, with several continuing to rise and some hitting the highest levels since 2022. Experts and reports attributed the rally to China’s tech innovation push, including breakthroughs like DeepSeek, as a key driver of investor confidence and market growth.

On the A-share market, Will Semiconductor hit the daily limit, with its market capitalization exceeding 160 billion yuan ($21.9 billion), the highest since April 2022. Guangdong Leadyo also hit the daily limit, while Maxscend surged more than 10 percent. On the Hong Kong stock market, Fudan Microelectronics rose more than 11 percent, and Solomon Systech gained more than 5 percent, according to Wall Street News.

Since DeepSeek launched its “reasoning model” R1 on January 20, the Chinese artificial intelligence (AI) firm has quickly garnered global attention, stirring lasting excitement in the tech world with its efficiency and open-source breakthroughs.

Global hedge funds have been snapping up Chinese stocks for much of this year, with their buying accelerating in the past week as the emergence of homegrown AI start-up DeepSeek fueled investor enthusiasm, Reuters reported, citing a note from Goldman Sachs.

Onshore and offshore Chinese equities combined are by far the “most notionally net bought market” on Goldman Sachs’ prime brokerage book across the world, the bank said in a note to clients citing data through February 7, as seen by Reuters this week, according to the report.

“China is placing increasing emphasis on high-tech companies, particularly in AI, the internet and new-energy sectors. Innovation in these areas is growing, and the transformation of related achievements is becoming more common,” Zhao Xijun, co-president of the China Capital Market Research Institute at the Renmin University of China, told the Global Times on Wednesday.

Zhao said that China’s listing policies have grown increasingly flexible, fostering the listing of more tech companies. The emergence of DeepSeek is positioning China at the forefront of the global AI stage. 

DeepSeek’s breakthrough low-cost AI model has become a catalyst for the revaluation of Chinese assets among global investors that are already worried about the peaking valuation of US stocks, Reuters reported.

Zhao noted that with the growth of the AI industry led by DeepSeek, demand for servers, chips, data centers and cloud computing has surged, driving up stock prices in China’s related sectors. “The swift progress of companies such as DeepSeek, coupled with a more open investment environment, are drawing global investors and enhancing confidence in Chinese stocks,” Zhao added.

The MSCI China index has risen for four consecutive weeks since mid-January and is up more than 6 percent so far in February, outperforming the world’s major markets, according to Reuters.

Global Times