The Chinese flag and Indian flag on the left are arranged as photos.
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DeepSeek’s breakthrough in artificial intelligence has strengthened investor sentiment around Chinese stocks, with the country’s onshore specifications and over 26% surge in offshore stocks since January lows.
The surge in Chinese stocks comes as Indian stocks are in trouble in the corrections field, experts pointed out that they are spinning from India to China.
“Every time the Chinese market rises, the Indian market falls,” said Thio Siew Hua, managing director and head of equity at Lion Global Investors.
Last year, China’s CSI300 received negative returns for three consecutive years, while Indian stocks have already seen secular growth in the past nine years, but the return in 2024 is much lower than the previous year.
“You need to sell something to fund new things, so that’s what’s happening, especially in the disappointment we’re seeing in India,” she told CNBC.
Since DeepSeek issued the R1 model in January, Chinese stocks have been crying as it challenged the U.S.-led AI ecosystem, claiming that it is much cheaper than higher AI players.
The Hang Seng Tech index listed the 30 largest technology companies in Hong Kong on Friday, the highest in nearly three years.
Meanwhile, the MSCI China Index (stays away from its January lows) grew 26.5% – up nearly 18% this year, while the MSCI India Index has so far fallen above 7%.
Alex Smith, an Asian equity investment expert at Abrdn, said the redistribution to China is driven by a stronger narrative in multiple ways.
Whenever the Chinese market rises, the Indian market falls.
Sasha
Lion Global Investors
“We’ve seen the strong (China) market move to the upside after the launch of DeepSeek,” Smith told CNBC.
The rise of DeepSeek has strengthened investors’ interest in Chinese technology companies. Smith said that Chinese local models, such as DeepSeek’s R1 and Alibaba’s QWEN 2.5, demonstrate the ability of Chinese companies to continuously improve their performance while reducing their inference costs.
India’s charm is reduced
India’s economy has been working hard to slow down, and the stock market has Rapid correction Smith said earnings expectations remain in recent months and near-term.
India’s GDP Growing 5.4% in the quarter ended in Septemberreflecting the weakest growth in the last seven quarters. At the beginning of the year, the government Lower its economic growth forecast In the fiscal year ended March, it was 6.4%, the lowest in four years.
By the end of January, 33% of the world’s large EM funds surveyed by Nomura were “overweight” Chinese and Hong Kong stocks, up from 26% in December. Instead, Nomura statistics show that global EM funds have increased by 6% on Indian stocks.
50% of the funds surveyed said they had cut their allocations to India by the end of January, while the allocations to Chinese and Hong Kong stocks increased.
Indian benchmark Nifty 50 for the past year
Nicole Wong, portfolio manager at Manulife, told CNBC that she made profits distributed in India in January while being “overweight” in the stock markets in China and Hong Kong, especially in the Chinese technology sector.
The momentum in the Indian stock market has now turned a little bit, she added, after investors viewed Indian stocks as the preferred place to park their money in the emerging market space for most of 2024.
Thio said that in the years after the pandemic, many investors moved out of China, and those investors moved to countries such as India.
China’s CSI 300 lost more than 5%, nearly 22% and 11% in 2021, 2022 and 2023 respectively. In contrast, India’s Nifty 50 annual earnings exceeded 24%, 4%, 20%.
Abrdn’s Smith said that given that investors are now firmly firmly in Donald Trump’s second era and that more aggressiveness has been taken in China due to tariff threats Advancing stimulus measures, so the current traffic conversion makes sense.
Despite rising optimism in the Chinese market, the country’s economy has been facing several headwinds. Experts suggest that this requires a warning approach.
“It may be too early to see the worst of the situation in China,” said Manulu Animal Wang.
It is important to note that the Chinese market is still relatively volatile, said James Liu, founder and head of research at Clearnomics.
“Factors such as evolving trade wars, repeated concerns about China’s financial system, the real estate bubble and uncertainty over government stimulus may drive volatility in 2025,” he said.
In Indian stocks, there is still a chance to make a profit given the correction since the beginning of the year, Ken Wong, an Asian equity portfolio expert at Eastspring Investments.
Wong allocates 51% of his portfolio to China, with 46% in India saying he is seeking to cut contact with small and medium-sized stakes in India, but pays attention to some of the big companies, namely finance, real estate and banks Industry.
