Chinese hedge fund High-Flyer's utilization of artificial intelligence in the stock markets has initiated an AI competition among mainland asset managers, potentially revolutionizing the country's $10 trillion fund management sector.
High-Flyer, a quant fund, not only integrated AI into its multi-billion dollar portfolio but also founded DeepSeek, China's leading AI startup. DeepSeek's cost-effective large language model surprised Silicon Valley, challenging Western dominance in the AI field.
This innovation has spurred other Chinese hedge funds like Baiont Quant, Wizard Quant, and Mingshi Investment Management to intensify their AI research. Additionally, numerous mutual fund companies are swiftly adopting DeepSeek into their investment processes.
Baiont Quant's CEO Feng Ji stated, "We are in the eye of the storm of an AI revolution," emphasizing the shift to machine learning-based market trading. Feng noted the transformation in perception, saying, "Two years ago, AI-powered quants were met with skepticism, but today, embracing AI is vital for survival."
Most of these funds utilize AI to analyze market data and generate trading signals based on investor risk profiles, rather than creating models like DeepSeek. As Chinese equivalents of U.S. systematic trading firms emerge, fund managers anticipate heightened competition for "alpha".
Wizard Quant's recent recruitment drive for top AI talent aims to "reshape the future of science and technology". Similarly, Mingshi's Genesis AI Lab is recruiting computer scientists to enhance research and investment capabilities.
Local authorities are poised to support this AI trend, acknowledging the need for substantial computing power and high-performance chips. Authorities, like the Shenzhen government, have committed funds to subsidize hedge funds' computing needs for AI development.
China's mutual fund industry is actively integrating AI. Numerous retail fund companies have successfully incorporated DeepSeek, streamlining AI applications. For example, Zheshang Fund's AI platform enhances efficiency with AI agents assisting in research and investment tasks.
Larry Cao, Principal Analyst at FinAI Research, noted that DeepSeek has "leveled the playing field for Chinese fund managers," empowering smaller firms against U.S. counterparts. Feng of Baiont expressed how AI accelerates growth, enabling newcomers to rival established incumbents.
Innovations like DeepSeek are transforming the investment landscape, enabling swift acquisition of expertise and propelling AI adoption in the fund management industry.