China Attracts $1.3 Trillion in a Month as DeepSeek Fuels Market Surge

The success of Chinese AI startup DeepSeek has drawn massive investor interest to the country’s stock market, leading to a $1.3 trillion capital inflow over the past month.

According to Bloomberg, this surge has fueled China’s tech sector, while India’s market has shrunk by over $720 billion during the same period.

The MSCI China Index has now outperformed its Indian counterpart for three consecutive months, marking China’s longest period of market dominance in two years.

Ken Wong, an analyst at Eastspring Investment, emphasized that DeepSeek’s success reaffirms China’s key role in the AI ecosystem. His firm has since increased investments in Chinese internet holdings while cutting exposure to Indian stocks, which he believes are overvalued.

In recent years, investors have shifted focus to India, attracted by rising infrastructure spending and manufacturing growth as an alternative to China. However, capital is now rotating back to China, signaling a fundamental reassessment of its investment potential, especially in high-tech industries.

Vivek Dhawan, a fund manager at Candriam, believes that DeepSeek-driven investments could provide a long-term boost to China’s economy and stock market. He noted that given the current risk-reward ratio, China now appears more attractive to investors than India.