After DeepSeek, Chinese fund managers beat High-Flyer's path to AI

By Samuel Shen and Vidya Ranganathan

SHANGHAI/SINGAPORE (Reuters) - Chinese hedge money High-Flyer's usage of artificial quality successful trading markets has spurred an AI arms contention among mainland plus managers that could shingle up the country's $10 trillion money absorption industry.

Quant money High-Flyer not lone deployed AI successful its multi-billion dollar portfolio, it besides built China's astir notable AI start-up DeepSeek whose cost-effective ample connection exemplary stunned Silicon Valley and undermined Western dominance of the AI sector.

In its wake, aspiring Chinese hedge money managers specified arsenic Baiont Quant, Wizard Quant and Mingshi Investment Management are stepping up AI research, portion dozens of communal money companies are rushing to incorporated DeepSeek into their concern workflow.

"We are successful the oculus of the storm" of an AI revolution, said Feng Ji, main enforcement of Baiont Quant, which uses instrumentality learning to commercialized markets with nary quality intervention.

"Two years ago, galore money managers would look astatine america AI-powered quants with mockery oregon disbelief," said Feng. "Today, these sceptics could beryllium retired of concern if they don't clasp AI."

Most of these funds usage AI to process marketplace information and make trading signals based connected their investors' hazard profiles, alternatively than nutrient DeepSeek-like models.

And arsenic much home-grown versions of U.S. systematic trading firms specified arsenic Renaissance Technologies and D.E.Shaw are born, money managers expect contention for "alpha", oregon outperformance, to intensify.

Wizard Quant advertised past period to enlistee apical AI researchers and engineers for a laboratory to "reshape the aboriginal of subject and technology".

Demand for coding endowment is heating up. Mingshi said its Genesis AI Lab is hiring machine scientists to enactment probe and investment.

In a caller roadshow, plus manager UBI Quant told investors it had already acceptable up an AI laboratory respective years agone to research the usage of AI successful concern and elsewhere.

The contention to make amended trading strategies utilizing AI requires immense computing powerfulness and high-performance chips, and section authorities said they are acceptable to help.

For example, the authorities of the confederate metropolis of Shenzhen has vowed to rise 4.5 cardinal yuan ($620.75 million) to subsidise hedge funds' depletion of computing power, successful enactment of their AI development.

DEEPSEEK SCRAMBLE

China's communal money manufacture is besides scrambling to clasp AI.

More than a people of retail money companies, including China Merchants Fund, E Fund and Dacheng Fund, person completed section deployment of DeepSeek.

The open-sourced, low-cost ample connection exemplary has "greatly lowered the barroom for AI applications" for the communal money industry, said Hu Yi, vice wide manager of intelligent equity concern astatine Zheshang Fund Management.

Zheshang Fund has embedded DeepSeek into its AI level and is processing AI agents to boost ratio of probe and investment.

For example, AI agents volition bash astir of the enactment of inferior analysts today, specified arsenic monitoring marketplace signals and penning regular comments, "forcing humans to bash much originative things," Hu said.

"Before DeepSeek, AI had mostly been the realm of apical tier players fixed the cost, talent, and exertion required" but DeepSeek had "levelled the playing crushed for Chinese money managers, which are smaller than their U.S. counterparts," said Larry Cao, Principal Analyst astatine FinAI Research.

Baiont's Feng said AI's accelerated advancement offers precocious comers to concern absorption the accidental to situation bigger incumbents.

"A seasoned money manager whitethorn person accumulated 20 years of experience, but with AI, 1 tin get that acquisition successful 2 months utilizing 1,000 GPUs," said Feng, whose five-year-old money institution presently manages 6 cardinal yuan, eclipsing galore older rivals.

($1 = 7.2493 Chinese yuan renminbi)

(Reporting by Samuel Shen successful Shanghai and Vidya Ranganathan successful Singapore; Editing by Christopher Cushing)