DeepSeek ignites the AI boom, Chinese technology stocks regain favor, while funds from India accelerate Outflow.

With the technological breakthroughs from local AI company DeepSeek, statistics from Bloomberg show that in the past month, Global hedge funds surged into the Chinese stock market at the fastest pace in months, driving the total Market Cap in onshore and offshore markets to grow by over 1.3 trillion dollars.

Meanwhile, the Indian market experienced a evaporation of 720 billion dollars during the same period, setting a record for the largest Outflow of funds in history. The MSCI Chinese Index has outperformed the Indian index for three consecutive months, marking the longest consecutive increase in two years.

At the same time, the repositioning actions of Institutions are also quite significant, as most Funds have been reducing their exposure to Indian Stocks in recent months, while increasing their Shareholding in Chinese Stocks.

Reports indicate that asset management companies like Eastspring Investments recently increased their exposure to the Chinese Internet Sector while reducing their holdings in 'overvalued' Indian CNI Mid-Small Cap.Index stocks; Man Group's Asia Fund raised its Chinese position from 30% to 40%, while its Indian position dropped from 21% to 18%.

Ken WONG, an expert in Asian stock investment portfolios at Eastspring Investments, stated:

"DeepSeek's success shows that China actually has companies that are important components of the entire AI ecosystem."

In addition to the optimistic sentiment sparked by DeepSeek, the valuation advantage of Chinese assets is also a major key attraction— the expected PE of the MSCI Chinese Index is only 11 times, less than half of the Indian Index (21 times).

Andrew Swan, the head of Man Group's Asia (excluding Japan) Stocks, added that the further stimulus measures China is likely to announce are also important:

"We believe that policy will now shift towards Consumer, specifically encouraging the transformation of current household savings into actual demand."

However, some investors remain skeptical about the sustainability of the rebound in China's stock market. Helen Zhu, Chief Investment Officer at Nanfang Trinity, questioned the commercial prospects of AI technology:

"The long-term profitability model remains unclear."

Bloomberg data also shows that$Hang Seng TECH Index (800700.HK)$while entering a technical bull market, the trading congestion of Chinese stocks has risen to a one-year high, causing some institutions to worry about short-term overheating risks.

Morgan Stanley also stated that the recent pullback in India's stock market has overly reflected short-term bearish sentiment, while the long-term growth story led by the country's infrastructure investments and manufacturing remains unchanged.

Despite ongoing controversies, market sentiment has significantly shifted.$Alibaba (BABA.US)$In the past five weeks, Market Cap surged by 100 billion USD, and the Hang Seng TECH Index rebounded 22% from its low in January.

Nicole Wong, portfolio manager at Manulife Investment Management, believes that:

"The breakthrough of DeepSeek provides a timely narrative pivot for capital inflow, and the tactical long position window has already opened."

Want to learn more about stocks benefiting from DeepSeek? Make good use of the 'Investment Theme' feature, go to Futubull>US Stocks>Investment Themes>DeepSeek Concept Stocks, and capture investment opportunities!

Editor/new