On February 10, a remarkable trend unfolded across the U.S. and European stock markets, with key indices experiencing a collective surgeThe Nasdaq index rose nearly 1%, reflecting a re-energized investor sentiment particularly towards companies with ties to ChinaNotably, stocks listed as part of the Nasdaq China Golden Dragon Index skyrocketed by an impressive 2.61%, hitting a four-month closing high, and signaling a newfound optimism among investorsMajor Chinese companies saw significant gains, with Youdao experiencing a fantastic increase of over 41% in value, while social media platform Zhihu and tech firm Century Interconnect both surged by more than 15%. The momentum didn't stop there, as cloud service provider Kingsoft Cloud climbed over 8%, Alibaba rose by more than 7%, and self-driving technology company Pony.ai also saw gains of over 7%.

The positive movement in stock prices coincides with a chorus of endorsements from various international financial institutions for Chinese assetsAnalysts at Deutsche Bank, Goldman Sachs, and Bank of America have all taken bullish positions regarding the potential of Chinese equities, suggesting that the performance of Chinese assets will not only be competitive but will also outshine other regions by 2025. Deutsche Bank's statements were particularly emphatic, projecting a future when the value of Chinese stocks is realigned with their true worth.

This optimism extends beyond mere stock valuation; it reflects a growing recognition of the capabilities and potential of Chinese startups and tech companiesEarlier this month, a Chinese startup named DeepSeek unveiled two advanced open-source large models that significantly lowered the costs associated with training and inference

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Their performance has been compared to leading models globally, revolutionizing perceptions within both domestic and international tech circles.

Peter Milliken, the head of corporate research for the Asia-Pacific region at Deutsche Bank, expressed the widespread belief that China’s technological achievements have often been underappreciated by investorsWith DeepSeek's groundbreaking innovations gaining international attention, the value of China’s intellectual property is garnering the recognition it deservesThe country’s edge in high-value sectors and its dominant position in global supply chains are expanding at an unprecedented pace.

Goldman Sachs has drawn attention to a shift in the AI industry landscape, suggesting a move from hardware-centric investments to software application-centric onesThis shift is expected to create new opportunities for diversifying market investments, particularly favoring tech stocks linked to Chinese firmsIn their report, Goldman Sachs highlighted that the MSCI China Index’s high exposure to AI software could lead to outstanding performance in the near term, recommending an overweighting of Chinese tech stocks that exhibit innovation and market advantages.

Financial institutions are not only observing the revaluation of tech stocks; notably, the scope of investment interest in Chinese assets is broadeningAnalysts have been predicting that 2025 could see a dramatic restorative effect on various sectors across the Chinese marketIndeed, Deutsche Bank anticipates that this year, global investors will recognize the competitiveness of China’s manufacturing and service industries, leading to an elimination of the discount currently placed on Chinese equities, along with improvements in corporate profitability as policy boosts take root.

Meanwhile, Bank of America’s strategists foresee a potential waning in the dominance of the U.S. stock market and have urged investors to consider increasing their holdings in Chinese stocks

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This perspective has been echoed by industry leaders such as Nicolai Tangen, the CEO of Norway’s Government Pension Fund, who at the Davos Forum suggested that investors should pivot away from U.S. tech stocks and private equity bonds while embracing Chinese assetsData from the fund shows a remarkable increase in Chinese securities holdings, which rose by $7.24 billion by the end of 2024 compared to the previous year.

The confidence observed among international financial entities in Chinese assets roots itself in the expected acceleration of the Chinese economyAnalysts at BlackRock similarly noted that after years of transformation and recovery, China is expected to leverage new productive forces within high-tech manufacturing, with growth not only enhancing labor absorption but also generating a robust economic cycleThis sentiment was made clear by BlackRock’s multi-asset and quantitative investment director, Wang Xiaojing, who remarked on the optimistic forecasts surrounding Chinese markets over the next 12 to 36 months.

Investors witnessed significant momentum in the A-share market following the Lunar New Year celebrations, fostered by a resurgence in sentiment driven by advancements in AI technologyNotably, the total turnover in the A-share market approached 2 trillion yuan on February 7, 2025. Data from Minsheng Securities painted a picture of robust individual investor sentiment, which remained at historic highs, complemented by upward movements in institutional investor sentiment.

As the market sentiment shifted progressively towards the positive, many analysts have predicted that the A-share market could enter a phase of vigorous growthPost-New Year adjustments in the market suggested optimism ahead, particularly alongside expected developments from U.S. policies that could catalyze further growth opportunities in the coming months

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