Chinese retail traders embrace DeepSeek in a nod to quants

Chinese retail investors are increasingly turning to DeepSeek and other artificial intelligence tools to navigate the stock market, marking a significant shift from last year’s government crackdown on computer-driven quantitative trading.

Embracing AI for market gains
Online crash courses and packed training sessions have become the norm as mom-and-pop investors adopt AI-powered models to beat the market. DeepSeek, backed by High-Flyer—a hedge fund based in eastern Hangzhou—has not only spurred a rally in Chinese stocks but has also reshaped perceptions of China’s $700 billion hedge fund industry. “The future is the digital age, and AI will be vital,” said Hong Yangjun at a weekend training session in downtown Shanghai.

Social media platforms are now awash with online courses that teach retail traders how to evaluate companies, select stocks, and even write trading codes using DeepSeek. Hangzhou-based trader Wen Hao noted, “Using quantitative tools to pick stocks saves a lot of time. You can also use DeepSeek to write codes,” reflecting the growing confidence among individual investors in leveraging technology for better market insights.

From backlash to adoption
This enthusiastic embrace of AI marks a stark turnaround from the public outcry just a year ago, when computer-driven quant funds were derided as “bloodsuckers” and blamed for market unfairness and volatility. At that time, regulators targeted the quant industry—then estimated at $260 billion—for its role in destabilizing the market. Now, the rapid adoption of DeepSeek is prompting changes at brokerages and wealth management firms as they adapt to a new era dominated by retail investor cash flow.

Last month, investors even paid 15,800 yuan each for a weekend lecture by Mao Yuchun, founder of Alpha Squared Capital, on trading stocks with AI. This trend highlights the growing acceptance of AI tools among individual investors, especially in a market where traditional financial advisory services once held sway.

Expert insights and caution
While the rise of DeepSeek signals a transformative moment for China’s stock market, some analysts urge caution. Larry Cao, principal analyst at FinAI Research, said DeepSeek’s cost efficiency and robust reasoning ability have made it popular, particularly as alternatives like ChatGPT remain off-limits in China. “People trust AI models more than they trust financial advisers, which is probably misplaced trust at least at this stage,” Cao warned, noting the risk of a herding effect if many retail traders rely on the same signals.

Feng Ji, CEO of Baiont Quant, added that DeepSeek has changed how the public views quant fund managers. “I can feel strongly that the public are thinking twice about quant fund managers' contributions to society. We actually provide liquidity and make the market more efficient,” he said.

A new era for retail investing
The surge in AI adoption comes as China’s stock market enjoys a robust start to the year, with brokerages racing to integrate AI models into their platforms. As the landscape shifts, retail investors are finding new ways to leverage technology to gain a competitive edge—a trend that could redefine market dynamics and investment strategies in the years ahead.

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