The rise of artificial intelligence in trading, led by Chinese hedge fund High-Flyer, has ignited a competitive AI arms race among mainland asset managers, potentially reshaping China’s $10tn fund management sector, according to a report by Reuters.
High-Flyer, renowned for integrating AI into its multi-billion-dollar portfolio, also founded DeepSeek, a cutting-edge AI startup whose cost-effective language model has stunned Silicon Valley, challenging the West’s longstanding dominance in the AI space.
In response, a new generation of Chinese hedge funds, including Baiont Quant, Wizard Quant, and Mingshi Investment Management, are aggressively ramping up AI research. Additionally, numerous mutual fund companies are rushing to incorporate DeepSeek into their investment strategies.
While most funds utilise AI for market data processing and generating trading signals in line with their investors’ risk profiles, the real disruption comes from firms pushing the boundaries of DeepSeek-like models.
As Chinese versions of US systematic trading giants like Renaissance Technologies and DE Shaw emerge, fund managers anticipate increased competition for “alpha” or outperformance.
Wizard Quant recently made headlines by recruiting top AI talent to join a lab focused on reshaping the future of science and technology.
The hunt for skilled coders is intensifying, with Mingshi’s Genesis AI Lab also seeking computer scientists to accelerate its research efforts.
Meanwhile, UBI Quant revealed that it established its own AI lab several years ago, further underscoring the industry’s growing focus on AI-driven investment strategies.
The quest to develop superior trading algorithms powered by AI requires substantial computing resources and advanced chips.
To fuel this race, local governments have stepped in with support. For instance, Shenzhen’s municipal government has pledged CNY4.5bn yuan ($620.75m) to subsidise hedge funds’ computing power consumption, backing the rapid AI development in the sector.
China’s mutual fund industry is also in the midst of a transformation, with numerous retail fund firms, including China Merchants Fund, E Fund, and Dacheng Fund, now adopting DeepSeek’s open-source language model.
According to Hu Yi, Vice General Manager of Intelligent Equity Investment at Zheshang Fund, DeepSeek’s affordability has reportedly “significantly lowered the entry barriers” for AI adoption in the mutual fund industry. Zheshang has already integrated DeepSeek into its AI platform and is working on AI agents designed to streamline research and investment operations.
AI-powered agents are now handling tasks traditionally performed by junior analysts, such as monitoring market signals and generating daily reports.
