Market Analysis

AI Tools Like DeepSeek Gain Popularity Among Chinese Retail Traders

Amos Simanungkalit · 11 Mar18.7K Views

Image Credit: Reuters

In a notable shift, Chinese retail investors are increasingly embracing artificial intelligence tools like DeepSeek, a move that contrasts sharply with last year’s government crackdown on computer-driven quantitative trading. This has spurred a surge in online crash courses and packed training sessions as individual traders look to leverage AI to gain an edge in the market.

DeepSeek, supported by a quant fund, has significantly impacted China’s $700 billion hedge fund sector, altering market dynamics and reshaping the perception of quant trading in a market historically driven by small retail investors. Retail traders, long skeptical of AI in trading, are now flocking to learn how to use these tools, driven by the belief that the future of trading lies in the digital age, where AI is key.

Hong Yangjun, an instructor at one of the training sessions in Shanghai, told eager investors, "The future is the digital age, and AI will be vital." He likened the evolution of the stock market to future warfare, where technology—like drones and robots—will dominate. This newfound enthusiasm marks a sharp contrast to last year’s backlash against quantitative funds, which were blamed for market volatility and seen as exploitative by many investors.

A year ago, China’s quantitative fund sector was under government scrutiny, with its value estimated at $260 billion. However, today, retail traders are paying thousands of yuan for weekend workshops on AI-based trading, signaling a dramatic shift in sentiment. The popularity of DeepSeek, a Chinese AI startup that has garnered attention in Silicon Valley, has catalyzed this change.

On Chinese social media platforms, traders are actively engaging with online courses focused on using DeepSeek to select stocks, evaluate companies, and develop trading algorithms. The AI tools allow traders to save time and automate decisions. Wen Hao, a Hangzhou-based trader, explained that using AI for stock picking and coding trading strategies has made a significant difference in his approach.

Global fund managers like BlackRock and Two Sigma have been using AI in investment strategies for years, and analysts suggest that small asset managers and retail investors in China stand to benefit from the cost-efficient, open-source model that DeepSeek offers.

The growing influence of AI in China’s retail investing scene comes on the back of strong stock market performance in early 2025. Goldman Sachs noted that the MSCI China index had its best start to the year in history, prompting brokers to integrate AI tools into their platforms.

Zhou Lefeng, president of Xiangcai Securities, predicted a major shift in Chinese investment behavior, saying, “In the future, Chinese investors will completely change the way they make investment decisions and place orders.” He observed that clients are now more likely to ask DeepSeek for investment guidance than wealth managers.

Despite the hype, analysts like Larry Cao from FinAI Research caution that AI models like DeepSeek are not infallible. Cao expressed concern about the level of trust investors place in these models, noting that while DeepSeek has strong reasoning abilities, its capabilities may still be limited. He warned of a possible herding effect if too many traders rely on the same AI signals.

Feng Ji, CEO of Baiont Quant, emphasized that DeepSeek has altered the public's perception of quant fund managers, suggesting that the AI revolution could lead to more efficient markets and better liquidity. However, he reminded that the role of quant funds is often misunderstood and that they contribute to market efficiency rather than causing losses.

In conclusion, while AI's role in trading continues to evolve, DeepSeek's influence is undeniable in reshaping how retail investors in China approach the stock market.