The rise of artificial intelligence in China’s financial markets is setting off a technological revolution, as hedge funds race to integrate AI-driven trading strategies. Leading the charge is High-Flyer, a pioneering quant fund that has not only leveraged AI to manage its multi-billion-dollar portfolio but also created DeepSeek, a groundbreaking AI startup that is challenging Silicon Valley’s dominance.
Following High-Flyer’s success, a wave of Chinese hedge funds, including Baiont Quant, Wizard Quant, and Mingshi Investment Management, are ramping up their AI research to stay competitive. Meanwhile, dozens of mutual fund companies are rushing to incorporate DeepSeek’s low-cost, open-source AI model into their investment processes.
The Game-Changer in Quantitative AI-Driven Trading
“We are in the eye of an AI revolution,” said Feng Ji, CEO of Baiont Quant, whose firm uses machine learning to trade without human intervention.
Just two years ago, AI-powered trading was met with skepticism, but now, fund managers who fail to embrace AI risk becoming obsolete. AI is rapidly transforming quantitative trading, where hedge funds use sophisticated algorithms to process market data, generate trading signals, and optimize investment decisions.
Wizard Quant recently launched a recruitment drive to attract top AI researchers and engineers, aiming to reshape the future of finance. Similarly, Mingshi Investment Management’s Genesis AI Lab is actively hiring computer scientists to advance AI-driven research and investment strategies.
Government-Backed AI Expansion
China’s local governments are also stepping in to fuel the AI boom in asset management. The Shenzhen government has pledged 4.5 billion yuan ($620.75 million) in subsidies to support hedge funds’ AI infrastructure, including high-performance computing resources.
DeepSeek Disrupts the Mutual Fund Industry
Beyond hedge funds, China’s mutual fund industry is also rapidly adopting AI. Leading asset managers such as China Merchants Fund, E Fund, and Dacheng Fund have already integrated DeepSeek into their operations.
“The open-source, low-cost nature of DeepSeek has dramatically lowered the barrier for AI adoption in the mutual fund industry,” said Hu Yi, Vice General Manager of Intelligent Equity Investment at Zheshang Fund Management. His firm is now developing AI agents to automate routine analytical tasks, allowing human investors to focus on higher-level strategic decision-making.
Before DeepSeek, AI-powered trading was largely limited to top-tier funds due to high costs and complex technical requirements. However, DeepSeek is now leveling the playing field, allowing smaller Chinese fund managers to compete with their larger U.S. counterparts.
AI: The Great Equalizer in Fund Management
Baiont’s Feng believes that AI’s rapid progress could disrupt traditional investment hierarchies.
“A seasoned fund manager might have 20 years of experience, but AI can accumulate that knowledge in just two months using 1,000 GPUs,” Feng explained. His fund, just five years old, already manages 6 billion yuan, surpassing many older competitors.
With AI reshaping China’s $10 trillion fund management industry, traditional asset managers face a crucial choice—adapt or be left behind. As hedge funds and mutual funds continue to integrate AI into their workflows, the future of investing may no longer be defined by human expertise alone, but by the power of artificial intelligence.