Emerging-market equities surged to a three-month high, boosted by a combination of positive sentiment following Chinese President Xi Jinping’s meeting with top entrepreneurs and a rally fueled by DeepSeek’s artificial intelligence (AI) model. The MSCI Emerging Markets Index rose as much as 1.1% on Monday, reaching 1,137.43, the highest level since November.
Xi’s meeting sparked optimism that Chinese authorities might adopt a more business-friendly approach, contributing to the overall upbeat market sentiment. This optimism was further amplified by the weakening of the U.S. dollar.
James Ooi, a market strategist based in Singapore at Tiger Brokers, noted that the rally driven by DeepSeek’s AI model appears to have significant upside potential in the short term. He attributed the momentum to several factors, including relatively low valuations, increasing optimism around China’s technological innovations potentially surpassing those of the U.S., and the rapid adoption of AI technologies, which could open new business opportunities.
Tencent Holdings Ltd., which holds the second-largest weighting in the MSCI EM Index, has announced the integration of DeepSeek’s AI model into WeChat. The company joins an increasing number of service providers and government agencies in China that are adopting the app as part of their digital strategies.
According to strategists at Nomura Holdings, including Chetan Seth, Chinese tech stocks remain an attractive option for investors in Asia. The integration of DeepSeek’s AI has reignited interest in the technological capabilities of Chinese firms. The analysts believe these advancements will help reduce the valuation gap between Chinese and U.S. tech stocks, which could support a stronger performance for China’s technology sector in the future.
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