DeepSeek AI Adoption in China Soars as Retail Investors Embrace Quant Trading
DeepSeek AI adoption in China has surged as Chinese investors embrace AI tools. According to Reuters, retail traders are flooding training rooms as they seek to leverage DeepSeek and other computer models to beat the market. Online AI crash courses have become common in the Asian country after DeepSeek changed the perception of the $700 billion Chinese hedge fund industry.
A Radical Shift
Today, individual Chinese investors are learning to trade with AI. This is a stark contrast of the public outcry that rocked the country last year as investors protested against quant trading with AI. Retail investors viewed computer-driven quant funds negatively and even blamed regulators for contributing to market volatility and unfairness.
The Chinese government unleashed crackdowns on the $260 billion valued industry last year. Things have changed this year with each investor spending about $2,179.91 to learn how to trade stocks with AI in a weekend lecture delivered by Alpha Squared Capital founder, Mao Yuchun.
But rapid DeepSeek AI adoption in China’s stock market is also causing a shift in the way wealth managers and brokerage firms operate. These changes present new risks for retail investors using DeepSeek AI in the market that is driven and dominated by cash-flow from small-time traders.
The DeepSeek Advantage
DeepSeek has gained popularity among Chinese investors due to its strong reasoning, availability, and cost-effectiveness. The Chinese government has also been promoting the AI model.
“In the future, Chinese investors will completely change the way they make investment decisions and place orders. Previously, clients would ask wealth managers for investment advice. Now they ask DeepSeek,” Xiangcai Securities President Zhou Lefeng said.
But even with these advantages, analysts are concerned by how much investors trust the AI model. They caution that as an AI model, DeepSeek has some limitations.
“People trust AI models more than they trust financial advisers, which is probably misplaced trust at least at this stage. Large language models seem impressive. But at this stage, they are not necessarily smarter than most investors,” FinAI Research Analyst Larry Cao said.
Analysts have also warned of herding effects. This could happen if a single school trains a large number of investors to use the same signal to trade. Irrespective of these risks, DeepSeek has caused significant change in the perception of retail investors towards quant fund managers
“I can feel strongly that the public are thinking twice about quant fund managers’ contributions to society. I never think we caused retail investors’ losses. We actually provide liquidity and make the market more efficient,” Baiont Quant CEO Feng Ji said.
Baiont Quant is one of the Chinese quant fund managers that leverage machine learning to trade.
Tapping Social Media
Chinese social media platforms have also been flooded with online courses designed to help traders learn how to use DeepSeek to pick stocks, evaluate companies, and develop trading codes.
“Using quantitative tools to pick stocks saves a lot of time. You can also use DeepSeek to write codes,” Hangzhou-based trader Wen Hao said. Hao uses computer programs to identify the best time to buy and sell stock.
American hedge funds like Renaissance Technologies, BlackRock, and Two Sigma have been leveraging AI in investings. According to analysts, Chinese retail investors and smaller asset managers can benefit immensely by utilizing DeepSeek’s open-sourced AI models.
DeepSeek adoption in quant trading coincides with the positive start for stocks following several years of poor performance. According to Goldman Sachs, China’s MSCI Index registered its best start in history at the beginning of this year even as stock brokers focus on setting up AI models on their trading platforms.
