Goldman: DeepSeek fuels inflows into Chinese equities; mainland semiconductor and AI infrastructure stocks have already gained momentum.

Goldman recently stated that DeepSeek has begun driving inflows into mainland stocks, hedge funds are increasing their investments in China, and northbound trading has also purchased large amounts of mainland stocks listed in Hong Kong. Moreover, the cycle of mainland semiconductor and AI infrastructure stocks has started to take the lead, indicating that the later beneficiaries have strong potential to catch up.

Goldman expects that under the widespread application of AI, the annual EPS of mainland stocks will be raised by 2.5% in the next 10 years, and the fair value of mainland stocks will also be raised by 15% to 20% with the improvement of growth prospects. It is estimated that the inflow of funds may exceed US$200bn. However, the bank believes that China still needs strong stimulus policies to cope with deep-rooted macro challenges and promote sustainable growth of stock profits.

Goldman believes that AI is beneficial to corporate profits, stock multiples, and portfolio cash flows, so it raises the 12-month target price of the MSCI China Index from 75 points to 85 points; the 12-month target price of the CSI 300 Index from 4600 points to 4700 points.

Goldman also said that the high-tech and AI components of the Hang Seng Technology Index and CSI 1000 Index are the most representative for macro investors and index users, and the theme is preferred for data and cloud, software and applications, as the investment cycle of AI slows down but the number of users increases and the monetization potential increases.