Chinese retail traders embrace DeepSeek in a nod to quants
Classes, online courses mushroom to help traders use AI
DeepSeek changes public perception of Chinese quant funds
Brokerages, wealth managers embrace AI to satisfy retail clients
SHANGHAI/SINGAPORE, March 11 (Reuters) - If you cannot fight them, join them, is the mantra among Chinese mom-and-pop investors who are embracing DeepSeek and other artificial intelligence tools, in sharp contrast with last year's government crackdown on computer-driven quantitative traders.
Online crash courses have mushroomed and training rooms are packed with retail traders eager to beat the market using computer models, as the popularity of DeepSeek - itself backed by a quant fund - changed not only the market trajectory, but the perception of China's $700 billion hedge fund industry.
The rapid adoption of DeepSeek in China's retail-dominated stock market is also prompting changes at brokerages and wealth managers, while creating new risks for investors in a market dominated and driven by small-time traders' cash flow.
"The future is the digital age, and AI will be vital," Hong Yangjun told a packed room of individual investors learning to trade with AI on a weekend in February.
Just as future warfare will be fought with drones and robots, the stock market will be a battleground between computers, the lecturers told the class in an office in downtown Shanghai.
Such piety is in stark contrast to the public outcry a year ago against computer-driven quant funds, viewed as "bloodsuckers" by retail investors, and blamed by regulators for contributing to market unfairness and volatility.
The industry was also the target of a government crackdown roughly a year ago, when the sector was worth $260 billion by some estimates.
Last month, however, investors handed over 15,800 yuan ($2,179.91) each for a weekend lecture by Mao Yuchun, founder of Alpha Squared Capital, on how to trade stocks with AI, according to the organiser, who promoted the event by drawing attention to Alpha Squared's geographical affinity with High-Flyer.
High-Flyer, based in eastern Hangzhou, is the hedge fund behind DeepSeek - the Chinese AI start up that stunned Silicon Valley with its cost-efficient large language model and spurred a rally in Chinese stocks.
Meanwhile, Chinese social media is brimming with online courses teaching traders how to use DeepSeek to evaluate companies, pick stocks, and code trading strategies.
"Using quantitative tools to pick stocks saves a lot of time," said Wen Hao, a Hangzhou-based trader.
"You can also use DeepSeek to write codes," said Wen, who uses computer programs to determine the timing for buying and selling.
U.S. fund giants including BlackRock, Renaissance Technologies and Two Sigma have already been using AI in investing for some time. Analysts say small asset managers and even retail investors in China stand to benefit from the emergence of DeepSeek's open-sourced model.
ChatGPT is off-limits to Chinese users.
DEEPSEEK ADVICE
The fondness for the AI-led turnaround in the perception of quant trading has coincided with a sunny start to the year for stocks, after a few years in the doldrums.
Goldman Sachs said the MSCI China index (.dMICN00000PUS), opens new tab has made its best start of the year in history and brokers are racing to build AI models into their platforms.
"In the future, Chinese investors will completely change the way they make investment decisions and place orders," said Zhou Lefeng, president of Xiangcai Securities.
"Previously, clients would ask wealth managers for investment advice. Now they ask DeepSeek."
Larry Cao, principal analyst at FinAI Research, said DeepSeek is popular because it's cost-efficient, has strong reasoning ability, and unlike ChatGPT, is readily available, and is promoted by the Chinese government.
Nevertheless, he is surprised at the level of faith investors put in the model, cautioning that AI has limits.
"People trust AI models more than they trust financial advisers, which is probably misplaced trust at least at this stage," Cao said.
There could also be a herding effect if one school trains many retail investors to trade using the same signal.
"Large language models seem impressive. But at this stage, they are not necessarily smarter than most investors."
What's certain, said Feng Ji, CEO of Baiont Quant, is that DeepSeek has changed retail perception of quant fund managers.
"I can feel strongly that the public are thinking twice about quant fund managers' contributions to society," said Feng, whose company uses machine learning to trade.
"I never think we caused retail investors' losses. We actually provide liquidity and make the market more efficient."
($1 = 7.2480 Chinese yuan renminbi)
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
8 minutes ago
- Reuters
U.S. weekly new jobless claims drop to 6-week low
July 3 (Reuters) - The number of Americans filing new applications for jobless benefits fell to a six-week low last week, but the ranks of those continuing to collect benefits after their initial week held steady at the highest in nearly four years in the prior week. Initial claims for state unemployment benefits dropped 4,000 to a seasonally adjusted 233,000 - the lowest since mid-May - for the week ended June 28, the Labor Department said on Thursday. Economists polled by Reuters had forecast 240,000 claims for the latest week. The total ranks of those on jobless benefits rolls was unchanged in the week ended June 21 at 1.964 million, which is the highest level since the fall of 2021.
South Wales Argus
24 minutes ago
- South Wales Argus
Ryanair and easyJet cancel hundreds of flights amid air traffic control strikes
Ryanair said it was forced to make 170 cancellations on Thursday and Friday as the strikes affect flights to and from France – and also flights over the country to destinations such as the UK, Greece, Spain and Ireland – impacting more than 30,000 passengers. Luton-based rival easyJet said it had cancelled 124 flights today and was scrapping 150 tomorrow due to the industrial action. EasyJet said customers have been contacted directly and have the option to transfer to another flight for free or receive a refund, but advised all passengers to check the status of their flights in case of further disruption over the next two days. 'While this is outside of our control, we will do all we can to minimise the impact of the strike action,' easyJet said. Ryanair chief executive Michael O'Leary renewed calls on EU Commission President Ursula von der Leyen to take 'urgent action' to reform European Union air traffic control (ATC) services in light of the disruption, which comes at the start of the European summer holidays. Mr O'Leary said: 'Once again, European families are held to ransom by French air traffic controllers going on strike. 'It is not acceptable that overflights over French airspace en route to their destination are being cancelled/delayed as a result of yet another French ATC strike. 'It makes no sense and is abundantly unfair on EU passengers and families going on holidays.' EasyJet echoed the plea, asking for 'long-term solutions'. It said: 'On behalf of our passengers we are extremely unhappy with the strike action, particularly given the current performance of French ATC which has been the leading cause of airspace delays in Europe this summer. 'Long term solutions must be found for our customers and crew who suffer repeated disruption.' Airlines have long-campaigned for an overhaul of ATC services across Europe. Ryanair said it wants the EU to ensure ATC services are fully staffed for the first wave of daily departures, as well as to protect overflights during national ATC strikes. 'These two splendid reforms would eliminate 90% of all ATC delays and cancellations, and protect EU passengers from these repeated and avoidable ATC disruptions due to yet another French ATC strike,' Mr O'Leary added. Ryanair also said on Wednesday it had been hit by the recent conflict in the Middle East, and it cancelled more than 800 flights last month. It is among those to have cancelled and rerouted flights amid the conflict between Israel and Iran, as well as continued attacks in Gaza, which last week saw flights halted at Dubai airport in the United Arab Emirates (UAE).
Scottish Sun
29 minutes ago
- Scottish Sun
Major food brand that sold household staple in Asda & Ocado went bust owing £22MILLION in debt
A UK-BASED food firm that supplied a popular product to supermarkets has gone into administration. The company provided over 3,000 British shops with fresh basil and salad mixes. 2 Vertical farming start-up Jones Food officially went into administration in April (stock image) Credit: Getty Major farming start-up Jones Food, which is backed by Ocado, officially entered administration in April. The vertical farming trailblazer has previously been hailed as a game-changer for Britain's farming industry. This set-up has allowed vegetables to be picked next door to delivery depots, offering shoppers access to fresher than ever produce. However, the farming venture has struggled after Ocado signalled that it was not willing to provide more cash to the start-up. After failing to find a new backer, the company is unlikely to recoup the millions of pounds it pumped into the start-up. Costs of adminstration This includes £8.6 million of initial investment in 2019 and a £3.7 million cash injection in 2023. Filings for Jones Food's administration suggest Ocado could be facing a loss of over £20 million. Administrators for the start-up said funds from the sale of the business' assets would go toward paying off expenses and creditors. This marks another setback for Ocado, which has been battling to stem losses and churn out more cash in the face of higher debt costs. It has made heavy cuts to its research team in an attempt to help boost profit and was recently hit by a tripling of its debt interest costs after refinancing looming bonds. Mighty Drinks Enters Administration: What Went Wrong for the Plant-Based Brand? Ocado Group Ocado made a series of investments into tech start-ups in an attempt to break away form its image as an online grocer. The company struck a deal with M&S in early 2019 to run the online grocer Ocado Retail as a joint venture. Since then, Ocado Group has been focused on its robotic warehouses, which it has sold to other companies including Kroger in the US. The collapse of Jones Food comes just over a year after the start-up opened its second vertical farm. Ocado had said the farm was a 'coming-of-age for agricultural technology in the UK'. What does going into administration mean? WHEN a company enters into administration, all control is passed to an appointed administrator. The administrator has to leverage the company's assets and business to repay creditors any outstanding debts. Once a company enters administration, a "moratorium" is put in place which means no legal action can be taken against it. Administrators write to your creditors and Companies House to say they've been appointed. They try to stop the company from being liquidated (closing down), and if it can't it pays as much of a company's debts from its remaining assets. The administrator has eight weeks to write a statement explaining what they plan to do to move the business forward. This must be sent to creditors, employees and Companies House and invite them to approve or amend the plans at a meeting. A Notice of Intention is used to inform concerning parties that a company intends to enter administration. It is a physical document which is submitted to court, usually by directors aiming to prevent a company from being liquidated. Like with a standard administration process, a Notice of Intention stops creditors from taking out any legal action over a company while they try and rectify the business. It desribed Jones Food as having 'cracked the code for accessible, sustainable, premium food being grown all-year-round, at a super-competitive price'. The farm provided herbs including basil, coriander, and flat-leaf parsley for Ocado and Asda. However, vertical farming start-ups, which involves growing food on shelves, have struggled to become profitable. In filings for Jones Food, administrators said it was loss-making as soon as it was operational. They said this is because it was running at around a third or half of its factories' capacity, and demand from customers was variable. 'Jones Food is an innovative business, and Ocado Group has been a supporter and shareholder of the company for a number of years," Ocado said at the time of the administration. "As we await the outcome of the administration process, our thoughts are with all those involved with Jones Food.' More business stories And a major drinks brand sold in Asda, Sainsbury's, and Morrisons has also gone into administration. The UK's biggest music retailer also closed its doors last month. Plus, a trendy restaurant chain closed down all its high street locations.
