About two weeks ago, I shared my thoughts on why Chinese equities were worth considering, especially following the DeepSeek developments. What unfolded after that caught my attention. Goldman Sachs recently suggested that advancements in AI could significantly impact the trajectory of Chinese stocks. Not too long ago, Deutsche Bank also chimed in with an exceptionally optimistic perspective, emphasizing the potential growth of Chinese stocks, driven by broader economic themes.
In their analysis, Deutsche Bank states:
“We anticipate that by 2025, the global investing community will recognize China’s unmatched competitive edge. It’s becoming increasingly clear that Chinese companies are offering great value and, in many cases, superior quality across various manufacturing arenas and even in services. The market values dominance, and we foresee the elimination of the China discount.”
That’s quite an introduction, isn’t it?
Deutsche Bank asserts that the bull market for Hong Kong and Chinese equities actually kicked off in 2024. They predict that these markets will not only return to previous highs but surpass them in the medium term. China’s ascent up the value chain is evident, transitioning from textiles to leading in advanced technology. The nation is showcasing its prowess by flooding international markets with competitively priced electric vehicles, introducing a sixth-generation fighter jet, and rolling out the DeepSeek AI system.
DeepSeek seems to be the turning point that highlights China’s growing strength in intellectual property. Deutsche Bank draws comparisons to energy investments; where market players previously underestimated the sector, they now find themselves unprepared and needing to catch up.
