The adoption of artificial intelligence by Chinese hedge fund High-Flyer in trading markets has ignited an AI-driven competition among mainland asset managers, potentially reshaping China’s $10 trillion fund management industry.
High-Flyer, a leading quantitative fund, has integrated AI into its multi-billion-dollar portfolio while also spearheading the development of DeepSeek, one of China’s most prominent AI startups. DeepSeek’s cost-efficient large language model has made waves in Silicon Valley, challenging Western dominance in the AI sector.
In response, emerging Chinese hedge fund managers such as Baiont Quant, Wizard Quant, and Mingshi Investment Management are intensifying their AI research, while numerous mutual fund firms are racing to integrate DeepSeek into their investment processes.
“We are in the eye of the storm of an AI revolution,” said Feng Ji, CEO of Baiont Quant, which leverages machine learning for fully automated trading.
“Two years ago, many fund managers viewed AI-driven quants with skepticism or even mockery,” Feng added. “Today, those same skeptics risk being pushed out of business if they fail to embrace AI.”
Rather than developing DeepSeek-like models, most of these funds leverage AI to analyze market data and generate trading signals tailored to investors’ risk profiles.
As more homegrown counterparts to U.S. systematic trading giants like Renaissance Technologies and D.E. Shaw emerge, fund managers anticipate fiercer competition for “alpha,” or market outperformance.
Last month, Wizard Quant launched a recruitment drive for top AI researchers and engineers to join its lab, aiming to “reshape the future of science and technology.”
Meanwhile, demand for coding talent is surging. Mingshi announced that its Genesis AI Lab is actively hiring computer scientists to bolster its research and investment strategies.During a recent roadshow, asset manager UBI Quant revealed to investors that it had established an AI lab years ago to explore the application of artificial intelligence in investment and beyond.
The push to develop superior AI-driven trading strategies demands significant computing power and advanced high-performance chips, and local authorities are stepping in to support the effort.
In one such move, the government of Shenzhen has pledged to raise 4.5 billion yuan ($620.75 million) to subsidize hedge funds’ computing power costs, aiming to accelerate AI development in the financial sector.RUSH FOR DEEPSEEK
China’s mutual fund industry is racing to integrate AI into its operations.
More than 20 retail fund companies, including China Merchants Fund, E Fund, and Dacheng Fund, have already implemented DeepSeek locally.
Hu Yi, vice general manager of intelligent equity investment at Zheshang Fund Management, noted that the open-source, low-cost large language model has “significantly lowered the barrier for AI adoption” within the mutual fund sector.AI Reshaping China’s Fund Management Landscape
Zheshang Fund has integrated DeepSeek into its AI platform and is developing AI agents to enhance research and investment efficiency.
“AI agents will take over much of the routine work done by junior analysts today, such as monitoring market signals and writing daily reports, allowing humans to focus on more creative tasks,” said Hu Yi, vice general manager of intelligent equity investment at Zheshang Fund Management.
Before DeepSeek, AI adoption was largely limited to top-tier firms due to high costs, technical complexity, and talent constraints. However, DeepSeek has “leveled the playing field for Chinese fund managers, which are generally smaller than their U.S. counterparts,” said Larry Cao, Principal Analyst at FinAI Research.
Baiont Quant CEO Feng Ji sees AI’s rapid advancement as an opportunity for newcomers to challenge industry giants. “A seasoned fund manager may have 20 years of experience, but with AI, that knowledge can be acquired in two months using 1,000 GPUs,” said Feng, whose five-year-old firm now manages 6 billion yuan, surpassing many older competitors.
($1 = 7.2493 Chinese yuan renminbi)