Schroders Investment: DeepSeek Boosts Chinese Tech Stocks, Expecting Stronger Performance Than Last Year

Mainland AI company DeepSeek has sparked a surge in the Hong Kong and mainland stock markets, and Schroders' Asia multi-asset and fixed income management director Yu Xueyu stated that DeepSeek has helped the market reevaluate the Hong Kong and mainland stock markets and boosted mainland tech stocks. He believes that more focus will be returned to Asia this year, and the performance of Hong Kong and mainland stock markets is likely to be no worse than last year.

The Hong Kong stock market ended a four-year bear market last year, and Yu Xueyu noted that even though the Hang Seng Index surged 18% last year, the Hong Kong stock market is still very cheap, and the breakthrough of mainland AI technology has helped to restore the valuation of mainland tech stocks. However, the future rise cannot only rely on DeepSeek, but also depends on whether the Chinese economy can recover and whether large tech companies will further support the development of AI in China, so he currently gives a "neutral" rating to the Hong Kong and mainland stock markets.

He pointed out that the Hong Kong and mainland stock markets can rise and fall quickly, so investors should pay attention to how long the money will stay, and it is possible that the money will leave after making a profit. "The threshold has been broken, and the valuation can rise again," as long as the Chinese economy recovers steadily, without explosive growth, and AI continues to develop, it is not difficult for the Hang Seng Index to return to 25,000 points. "I don't think the Hong Kong stock market will be so bad, it just lacks a story. Hong Kong's inherent image is a gateway to China and a place where capital flows out. As long as Hong Kong can prove that it is not only relying on the Chinese economy, but also can cultivate new growth stories or themes through AI breakthroughs, capital will flow in."

Yu Xueyu suggested that investors adopt a diversified asset allocation strategy, "there are opportunities this year, but you need to diversify risks". After the "stock and bond double play" in 2022, this year may be the third year of global stock market rise, and he is cautiously optimistic about the global stock market this year.