Foreign-funded institutions bullish on Chinese assets

As China's scientific and technological innovation results have exceeded expectations, the "weight" of Chinese assets is beginning to increase in foreign-funded institutions, as reported by news portal 21jingji.com on Tuesday.

Before Spring Festival, DeepSeek, a home-grown startup in the artificial intelligence sector, launched two open-source AI models that shocked people in the scientific and technological circles both at home and abroad. This is due to the performance of these models which is not only on par with the world's leading large-scale models, but also the huge reduction in its training and reasoning costs.

DeepSeek has enabled investors to see the potential of Chinese technology stocks. Since February, several foreign-funded institutions including Goldman Sachs Group, Deutsche Bank AG and Bank of America, have become increasingly bullish on Chinese assets.

The rise of DeepSeek will create a medium- to long-term revaluation opportunity for Chinese technology stocks, said the news portal citing the Goldman Sachs Group.

By the end of 2025, the MSCI China index is expected to rise 14 percent under the neutral forecast, and the rise of the index is expected to surge to 28 percent under the optimistic forecast, the group forecasted.

Goldman Sachs pointed out that DeepSeek's rise indicates that the development of the AI industry is shifting from the layer of hardware infrastructure to the layer of software application. This trend also provides new opportunities for the diversified development of the global market, especially for China-concept technology stocks, or Chinese technology stocks listed overseas.

"China's technological achievements have long been underestimated by investors," said Peter Milliken, Deutsche Bank's APAC Head of Company Research. "DeepSeek's launch proved the value of Chinese intellectual property. Moreover, China's advantage in high value-added fields and its leading position in the supply chain are rapidly expanding," said Milliken.

Not only have China-concept technology stocks been revaluated, but many foreign-funded institutions have also advised investors to increase their exposure to other Chinese assets, said the 21jingji.com.

Deutsche Bank said that Chinese assets will outperform other regions in 2025. Meanwhile, the Bank of America's strategist team recommends that investors should go long on Chinese stocks.

Nicolai Tangen, CEO of Norway's sovereign wealth fund suggested investors increase their holdings in China.

Public data cited by 21jingji.com showed that the market value of Chinese securities held by Norway's sovereign wealth fund increased by $7.24 billion by the end of 2024, compared with the figure at the end of 2023.

After several years of transformation and recovery, China's economy is expected to achieve initial results driven by new quality productive forces, especially in the field of high-tech manufacturing; the economic growth rate is also set to return to a positive cycle, which will result in the country not only absorbing more labor but also promoting the formation of a larger-scale domestic economic cycle, said Wang Xiaojing, director of multi-asset and quantitative investments at asset management firm BlackRock.

"Based on the above reasons and combined with our calculations of the long-term premium composite model, we remain optimistic about the Chinese market over the medium term in the next 12 to 36 months, and we are positive about Chinese stocks and interest rate bonds," said Wang.