After DeepSeek, Chinese investors race to apply AI to trading

Chinese hedge fund High-Flyer's use of artificial intelligence (AI) in market trading has sparked an AI race among domestic asset managers that could shake up the country's $10 trillion fund management industry.

"Eye of the storm" of the AI revolution

Quantitative fund High-Flyer not only deploys AI in its billion-dollar portfolio, but also builds China’s most prominent AI startup, DeepSeek. DeepSeek’s low-cost large-scale language model has taken Silicon Valley by surprise and undermined Western dominance in AI.

Chinese hedge fund High-Flyer's use of artificial intelligence (AI) in market trading has sparked an AI race among asset managers in the country.

Following suit, ambitious Chinese hedge fund managers like Baiont Quant, Wizard Quant, and Mingshi Investment Management are stepping up their AI research, while dozens of mutual fund firms are rushing to integrate DeepSeek into their investment processes.

“We are at the epicenter of the AI revolution,” said Feng Ji, CEO of Baiont Quant, which uses machine learning to trade markets without human intervention.

“Two years ago, many fund managers looked at us – quant funds using AI – with ridicule or suspicion. Today, these skeptics could be out of the game if they don’t embrace AI,” added the head of Baiont Quant.

Most of these funds use AI to process market data and generate trading signals based on investors' risk profiles, rather than developing models like DeepSeek.

And as more and more domestic versions of US system trading firms such as Renaissance Technologies and DE Shaw emerge, fund managers expect the competition for “alpha” – or outperformance – to intensify.

Wizard Quant last month posted a job opening for top AI researchers and engineers for a lab aimed at “reshaping the future of science and technology.”

Demand for programming talent is heating up. Mingshi said their AI Genesis Lab is recruiting computer scientists to support research and investment.

During a recent roadshow, asset manager UBI Quant told investors that it set up an AI lab a few years ago to explore the use of AI in investing and other areas.

Race with DeepSeek

The race to create better trading strategies using AI requires massive computing power and high-performance chips, and local governments say they are ready to help.

More than 20 retail fund firms have completed the implementation of DeepSeek into trading.

For example, the Shenzhen city government in southern China has pledged to raise $620.75 million to subsidize hedge funds that consume computing power to support their AI development.

China’s mutual fund industry is embracing AI with enthusiasm. More than 20 retail fund companies, including China Merchants Fund, E Fund, and Dacheng Fund, have completed local deployments of DeepSeek.

This low-cost, open-source big data model has “significantly lowered the barrier to AI applications” in the mutual fund industry, according to Hu Yi, deputy general manager of smart stock investing at Zheshang Fund Management. Zheshang Fund has integrated DeepSeek into its AI platform and is developing AI agents to improve research and investment efficiency.

For example, AI agents will do much of the work done by low-level analysts today, such as tracking market signals and writing daily commentary, “forcing humans to do more creative things,” said Hu Yi.

“Before DeepSeek, AI was largely a playground for top players due to the cost, talent and technology required,” but DeepSeek has “leveled the playing field for Chinese fund managers, which are smaller than their US counterparts,” said Larry Cao, principal analyst at FinAI Research.

Baiont's Feng Ji said the rapid advancement of AI presents opportunities for latecomers in the investment management space to challenge larger rivals.

“A seasoned fund manager might have accumulated 20 years of experience, but with AI, one can gain that experience in two months using 1,000 GPUs,” Feng Ji added.

Feng Ji's fund company, just five years old, now manages $827 million, surpassing many long-standing rivals.

(Source Reuters)

Source: https://www.baogiaothong.vn/sau-deepseek-nha-dau-tu-trung-quoc-dua-nhau-ung-dung-ai-vao-giao-dich-192250314122845097.htm