Shares of Gaotu Techedu Inc. soared 5.13% during intraday trading on Thursday, riding on the wave of optimism surrounding Chinese stocks. The surge came after the successful launch of DeepSeek, China's low-cost artificial intelligence (AI) system, which has been hailed as a "Sputnik moment" for the country's technological prowess.
According to a report by Deutsche Bank, the launch of DeepSeek has prompted investors to reassess China's manufacturing and service industries, which are now seen as occupying a leading position globally. The report suggests that 2025 could be the year when the investing world realizes China's ability to out-compete the rest of the world, potentially eliminating the "valuation discount" of Chinese stocks.
The bullish sentiment towards Chinese equities has also been fueled by expectations that the ongoing trade issues between China and the United States may see positive surprises. Deutsche Bank believes that the Trump administration may adopt a more pro-trade stance, potentially leading to a trade deal in the first half of 2025. Such a development could further bolster the Chinese stock market.
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