Latest news with #High-Flyer
Yahoo
15-03-2025
- Business
- Yahoo
After DeepSeek, Chinese fund managers beat High-Flyer's path to AI
By Samuel Shen and Vidya Ranganathan SHANGHAI/SINGAPORE (Reuters) - Chinese hedge fund High-Flyer's use of artificial intelligence in trading markets has spurred an AI arms race among mainland asset managers that could shake up the country's $10 trillion fund management industry. Quant fund High-Flyer not only deployed AI in its multi-billion dollar portfolio, it also built China's most notable AI start-up DeepSeek whose cost-effective large language model stunned Silicon Valley and undermined Western dominance of the AI sector. In its wake, aspiring Chinese hedge fund managers such as Baiont Quant, Wizard Quant and Mingshi Investment Management are stepping up AI research, while dozens of mutual fund companies are rushing to incorporate DeepSeek into their investment workflow. "We are in the eye of the storm" of an AI revolution, said Feng Ji, chief executive of Baiont Quant, which uses machine learning to trade markets with no human intervention. "Two years ago, many fund managers would look at us AI-powered quants with mockery or disbelief," said Feng. "Today, these sceptics could be out of business if they don't embrace AI." Most of these funds use AI to process market data and generate trading signals based on their investors' risk profiles, rather than produce DeepSeek-like models. And as more home-grown versions of U.S. systematic trading firms such as Renaissance Technologies and are born, fund managers expect competition for "alpha", or outperformance, to intensify. Wizard Quant advertised last month to recruit top AI researchers and engineers for a lab to "reshape the future of science and technology". Demand for coding talent is heating up. Mingshi said its Genesis AI Lab is hiring computer scientists to support research and investment. In a recent roadshow, asset manager UBI Quant told investors it had already set up an AI lab several years ago to explore the use of AI in investment and elsewhere. The race to generate better trading strategies using AI requires huge computing power and high-performance chips, and local authorities said they are ready to help. For example, the government of the southern city of Shenzhen has vowed to raise 4.5 billion yuan ($620.75 million) to subsidise hedge funds' consumption of computing power, in support of their AI development. DEEPSEEK SCRAMBLE China's mutual fund industry is also scrambling to embrace AI. More than a score of retail fund companies, including China Merchants Fund, E Fund and Dacheng Fund, have completed local deployment of DeepSeek. The open-sourced, low-cost large language model has "greatly lowered the bar for AI applications" for the mutual fund industry, said Hu Yi, vice general manager of intelligent equity investment at Zheshang Fund Management. Zheshang Fund has embedded DeepSeek into its AI platform and is developing AI agents to boost efficiency of research and investment. For example, AI agents will do most of the work of junior analysts today, such as monitoring market signals and writing daily comments, "forcing humans to do more creative things," Hu said. "Before DeepSeek, AI had mostly been the realm of top tier players given the cost, talent, and technology required" but DeepSeek had "levelled the playing ground for Chinese fund managers, which are smaller than their U.S. counterparts," said Larry Cao, Principal Analyst at FinAI Research. Baiont's Feng said AI's rapid advancement offers late comers to investment management the opportunity to challenge bigger incumbents. "A seasoned fund manager may have accumulated 20 years of experience, but with AI, one can acquire that experience in two months using 1,000 GPUs," said Feng, whose five-year-old fund company currently manages 6 billion yuan, eclipsing many older rivals. ($1 = 7.2493 Chinese yuan renminbi) Sign in to access your portfolio
Zawya
11-03-2025
- Business
- Zawya
Chinese retail traders embrace DeepSeek in a nod to quants
SHANGHAI/SINGAPORE - If you cannot fight them, join them, is the mantra among Chinese mom-and-pop investors who are embracing DeepSeek and other artificial intelligence tools, in sharp contrast with last year's government crackdown on computer-driven quantitative traders. Online crash courses have mushroomed and training rooms are packed with retail traders eager to beat the market using computer models, as the popularity of DeepSeek - itself backed by a quant fund - changed not only the market trajectory, but the perception of China's $700 billion hedge fund industry. The rapid adoption of DeepSeek in China's retail-dominated stock market is also prompting changes at brokerages and wealth managers, while creating new risks for investors in a market dominated and driven by small-time traders' cash flow. "The future is the digital age, and AI will be vital," Hong Yangjun told a packed room of individual investors learning to trade with AI on a weekend in February. Just as future warfare will be fought with drones and robots, the stock market will be a battleground between computers, the lecturers told the class in an office in downtown Shanghai. Such piety is in stark contrast to the public outcry a year ago against computer-driven quant funds, viewed as "bloodsuckers" by retail investors, and blamed by regulators for contributing to market unfairness and volatility. The industry was also the target of a government crackdown roughly a year ago, when the sector was worth $260 billion by some estimates. Last month, however, investors handed over 15,800 yuan ($2,179.91) each for a weekend lecture by Mao Yuchun, founder of Alpha Squared Capital, on how to trade stocks with AI, according to the organiser, who promoted the event by drawing attention to Alpha Squared's geographical affinity with High-Flyer. High-Flyer, based in eastern Hangzhou, is the hedge fund behind DeepSeek - the Chinese AI start up that stunned Silicon Valley with its cost-efficient large language model and spurred a rally in Chinese stocks. Meanwhile, Chinese social media is brimming with online courses teaching traders how to use DeepSeek to evaluate companies, pick stocks, and code trading strategies. "Using quantitative tools to pick stocks saves a lot of time," said Wen Hao, a Hangzhou-based trader. "You can also use DeepSeek to write codes," said Wen, who uses computer programs to determine the timing for buying and selling. U.S. fund giants including BlackRock, Renaissance Technologies and Two Sigma have already been using AI in investing for some time. Analysts say small asset managers and even retail investors in China stand to benefit from the emergence of DeepSeek's open-sourced model. ChatGPT is off-limits to Chinese users. DEEPSEEK ADVICE The fondness for the AI-led turnaround in the perception of quant trading has coincided with a sunny start to the year for stocks, after a few years in the doldrums. Goldman Sachs said the MSCI China index has made its best start of the year in history and brokers are racing to build AI models into their platforms. "In the future, Chinese investors will completely change the way they make investment decisions and place orders," said Zhou Lefeng, president of Xiangcai Securities. "Previously, clients would ask wealth managers for investment advice. Now they ask DeepSeek." Larry Cao, principal analyst at FinAI Research, said DeepSeek is popular because it's cost-efficient, has strong reasoning ability, and unlike ChatGPT, is readily available, and is promoted by the Chinese government. Nevertheless, he is surprised at the level of faith investors put in the model, cautioning that AI has limits. "People trust AI models more than they trust financial advisers, which is probably misplaced trust at least at this stage," Cao said. There could also be a herding effect if one school trains many retail investors to trade using the same signal. "Large language models seem impressive. But at this stage, they are not necessarily smarter than most investors." What's certain, said Feng Ji, CEO of Baiont Quant, is that DeepSeek has changed retail perception of quant fund managers. "I can feel strongly that the public are thinking twice about quant fund managers' contributions to society," said Feng, whose company uses machine learning to trade. "I never think we caused retail investors' losses. We actually provide liquidity and make the market more efficient." ($1 = 7.2480 Chinese yuan renminbi) (Reporting by Samuel Shen and Tom Westbrook Editing by Shri Navaratnam) Reuters
Reuters
11-03-2025
- Business
- Reuters
Chinese retail traders embrace DeepSeek in a nod to quants
Summary Classes, online courses mushroom to help traders use AI DeepSeek changes public perception of Chinese quant funds Brokerages, wealth managers embrace AI to satisfy retail clients SHANGHAI/SINGAPORE, March 11 (Reuters) - If you cannot fight them, join them, is the mantra among Chinese mom-and-pop investors who are embracing DeepSeek and other artificial intelligence tools, in sharp contrast with last year's government crackdown on computer-driven quantitative traders. Online crash courses have mushroomed and training rooms are packed with retail traders eager to beat the market using computer models, as the popularity of DeepSeek - itself backed by a quant fund - changed not only the market trajectory, but the perception of China's $700 billion hedge fund industry. The rapid adoption of DeepSeek in China's retail-dominated stock market is also prompting changes at brokerages and wealth managers, while creating new risks for investors in a market dominated and driven by small-time traders' cash flow. "The future is the digital age, and AI will be vital," Hong Yangjun told a packed room of individual investors learning to trade with AI on a weekend in February. Just as future warfare will be fought with drones and robots, the stock market will be a battleground between computers, the lecturers told the class in an office in downtown Shanghai. Such piety is in stark contrast to the public outcry a year ago against computer-driven quant funds, viewed as "bloodsuckers" by retail investors, and blamed by regulators for contributing to market unfairness and volatility. The industry was also the target of a government crackdown roughly a year ago, when the sector was worth $260 billion by some estimates. Last month, however, investors handed over 15,800 yuan ($2,179.91) each for a weekend lecture by Mao Yuchun, founder of Alpha Squared Capital, on how to trade stocks with AI, according to the organiser, who promoted the event by drawing attention to Alpha Squared's geographical affinity with High-Flyer. High-Flyer, based in eastern Hangzhou, is the hedge fund behind DeepSeek - the Chinese AI start up that stunned Silicon Valley with its cost-efficient large language model and spurred a rally in Chinese stocks. Meanwhile, Chinese social media is brimming with online courses teaching traders how to use DeepSeek to evaluate companies, pick stocks, and code trading strategies. "Using quantitative tools to pick stocks saves a lot of time," said Wen Hao, a Hangzhou-based trader. "You can also use DeepSeek to write codes," said Wen, who uses computer programs to determine the timing for buying and selling. U.S. fund giants including BlackRock, Renaissance Technologies and Two Sigma have already been using AI in investing for some time. Analysts say small asset managers and even retail investors in China stand to benefit from the emergence of DeepSeek's open-sourced model. ChatGPT is off-limits to Chinese users. DEEPSEEK ADVICE The fondness for the AI-led turnaround in the perception of quant trading has coincided with a sunny start to the year for stocks, after a few years in the doldrums. Goldman Sachs said the MSCI China index (.dMICN00000PUS), opens new tab has made its best start of the year in history and brokers are racing to build AI models into their platforms. "In the future, Chinese investors will completely change the way they make investment decisions and place orders," said Zhou Lefeng, president of Xiangcai Securities. "Previously, clients would ask wealth managers for investment advice. Now they ask DeepSeek." Larry Cao, principal analyst at FinAI Research, said DeepSeek is popular because it's cost-efficient, has strong reasoning ability, and unlike ChatGPT, is readily available, and is promoted by the Chinese government. Nevertheless, he is surprised at the level of faith investors put in the model, cautioning that AI has limits. "People trust AI models more than they trust financial advisers, which is probably misplaced trust at least at this stage," Cao said. There could also be a herding effect if one school trains many retail investors to trade using the same signal. "Large language models seem impressive. But at this stage, they are not necessarily smarter than most investors." What's certain, said Feng Ji, CEO of Baiont Quant, is that DeepSeek has changed retail perception of quant fund managers. "I can feel strongly that the public are thinking twice about quant fund managers' contributions to society," said Feng, whose company uses machine learning to trade. "I never think we caused retail investors' losses. We actually provide liquidity and make the market more efficient." ($1 = 7.2480 Chinese yuan renminbi)
Fox News
06-03-2025
- Politics
- Fox News
It's time to ban Chinese AI app DeepSeek from 'government devices,' state AGs urge Congress
State attorneys general have joined the growing calls from elected officials urging Congress to pass a law banning the Chinese-owned DeepSeek AI app on all government devices, saying "China is a clear and present danger" to the U.S. "DeepSeek appears to be another tool for Chinese spies to attack America's national security," the letter, signed by 21 attorneys general to House and Senate leaders, said. "Given the Chinese desire to steal America's secrets and the ability of DeepSeek to carry out this theft, Congress should quickly pass legislation to ban DeepSeek on government devices," the letter read. "Congress passed similar legislation two years ago to prevent TikTok from stealing information from our government." Montana AG Austin Knudsen, who drafted the letter, wrote that "China is trying to steal America's secrets. America must fight back. Congress should shut down China's latest Trojan horse by passing the No DeepSeek on Government Devices Act." The letter comes as longstanding concerns about Beijing's intellectual property theft of U.S. officials and Americans has been a point of public contention over the last several years. House Homeland Security Committee Chairman Mark Green, R-Tenn., introduced legislation last month to outlaw the app. DeepSeek is an AI-powered search and data analysis platform based in Hangzhou, China, owned by quant hedge fund High-Flyer. The launch of DeepSeek's new AI model, which is cheaper to operate than models from Meta and OpenAI, has raised concerns in U.S. markets. One of its chatbot functions is similar to ChatGPT, the California-based platform. The AGs charge that DeepSeek could be used by Chinese spies to compromise U.S. national security through the app's collection of user data, including chat history, keystrokes and IP addresses, and may secretly transmit this information to the Chinese Communist Party. Several countries, including Canada, Australia, South Korea, Taiwan and Italy, have already blocked DeepSeek due to these security risks. Several states, including Virginia, Texas and New York, have also banned the app from government devices. "Like it did with TikTok, Congress should protect America's national security by banning DeepSeek on government devices," the letter reads. "If it has not already taken action to administratively ban DeepSeek, we trust that the Trump Administration would swiftly implement this ban to protect our national security from America's 'potent and dangerous' adversary." The letter was signed by AGs from Alabama, Alaska, Arkansas, Florida, Georgia, Iowa, Kentucky, Louisiana, Missouri, Nebraska, New Hampshire, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah and Virginia. Fox News Digital has reached out to High-Flyer for comment.
Yahoo
25-02-2025
- Business
- Yahoo
DeepSeek rushes to launch new AI model as China goes all in
By Eduardo Baptista, Julie Zhu and Fanny Potkin BEIJING/HONG KONG/SINGAPORE (Reuters) - DeepSeek is looking to press home its advantage. The Chinese startup triggered a $1 trillion-plus sell-off in global equities markets last month with a cut-price AI reasoning model that outperformed many Western competitors. Now, the Hangzhou-based firm is accelerating the launch of the successor to January's R1 model, according to three people familiar with the company. Deepseek had planned to release R2 in early May but now wants it out as early as possible, two of them said, without providing specifics. The company says it hopes the new model will produce better coding and be able to reason in languages beyond English. Details of the accelerated timeline for R2's release have not been previously reported. DeepSeek did not respond to a request for comment for this story. Rivals are still digesting the implications of R1, which was built with less-powerful Nvidia chips but is competitive with those developed at the costs of hundreds of billions of dollars by U.S. tech giants. "The launch of DeepSeek's R2 model could be a pivotal moment in the AI industry," said Vijayasimha Alilughatta, chief operating officer of Indian tech services provider Zensar. DeepSeek's success at creating cost-effective AI models "would likely spur companies worldwide to accelerate their own efforts ... breaking the stranglehold of the few dominant players in the field," he said. R2 is likely to worry the U.S. government, which has identified leadership of AI as a national priority. Its release may further galvanize Chinese authorities and companies, dozens of which say they have started integrating DeepSeek models into their products. Little is known about DeepSeek, whose founder Liang Wenfeng became a billionaire through his quantitative hedge fund High-Flyer. Liang, who was described by a former employer as "low-key and introverted," has not spoken to any media since July 2024. Reuters interviewed a dozen former employees, as well as quant fund professionals knowledgeable about the operations of DeepSeek and its parent company High-Flyer. It also reviewed state media articles, social-media posts from the companies and research papers dating back to 2019. They told a story of a company that functioned more like a research lab than a for-profit enterprise and was unencumbered by the hierarchical traditions of China's high-pressure tech industry, even as it became responsible for what many investors see as the latest breakthrough in AI. DIFFERENT PATH Liang was born in 1985 in a rural village in the southern province of Guangdong. He later obtained communication engineering degrees at the elite Zhejiang University. One of his first jobs was running a research department at a smart imaging firm in Shanghai. His then-boss, Zhou Chaoen, told state media on Feb. 9 that Liang had hired prize-winning algorithm engineers and operated with a "flat management style." At DeepSeek and High-Flyer, Liang has similarly shunned the practices of Chinese tech giants known for rigid top-down management, low pay for young employees and "996" - working from 9 a.m. to 9 p.m. six days a week. Liang opened his Beijing office within walking distance of Tsinghua University and Peking University, China's two most prestigious education institutions. He regularly delved into technical details and was happy to work alongside Gen-Z interns and recent graduates that comprised the bulk of its workforce, according to two former employees. They also described usually working eight-hour days in a collaborative atmosphere. "Liang gave us control and treated us as experts. He constantly asked questions and learned alongside us," said 26-year-old researcher Benjamin Liu, who left the company in September. "DeepSeek allowed me to take ownership of critical parts of the pipeline, which was very exciting." Liang did not respond to questions sent via DeepSeek. While Baidu and other Chinese tech giants were racing to build their consumer-facing versions of ChatGPT in 2023 and profit off of the global AI boom, Liang told Chinese media outlet Waves last year that he deliberately avoided spending heavily on app development, focusing instead on refining the AI model's quality. Both DeepSeek and High-Flyer are known for paying generously, according to three people familiar with its compensation practices. At High-Flyer, it is not uncommon for a senior data scientist to make 1.5 million yuan annually, while competitors rarely pay more than 800,000, said one of the people, a rival quant fund manager who knows Liang. The largesse was funded by High-Flyer, which became one of China's most successful quant funds and, even after a government crackdown on the sector, still manages tens of billions of yuan, according to two people in the industry. COMPUTING POWER DeepSeek's success with a low-cost AI model is based on High-Flyer's decade-long and substantial investment in research and computing power, three people said. The quant fund was an earlier pioneer in AI trading and a top executive said in 2020 that High-Flyer was going "all in" on AI by re-investing 70% of its revenue, mostly into AI research. High-Flyer spent 1.2 billion yuan on two supercomputing AI clusters in 2020 and 2021. The second cluster, Fire-Flyer II, was made up of around 10,000 Nvidia A100 chips, used for training AI models. DeepSeek had not been established at that time, so the accumulation of computing power caught the attention of Chinese securities regulators, said a person with direct knowledge of officials' thinking. "Regulators wanted to know why they need so many chips?" the person said. "How they were going to use it? What kind of impact would that have on the market?" Authorities decided not to intervene, in a move that would prove crucial for DeepSeek's fortunes: the U.S. banned the export of A100 chips to China in 2022, at which point Fire-Flyer II was already in operation. Beijing now celebrates DeepSeek, but has instructed it not to engage with the media without approval, according to a person familiar with Chinese official thinking. Authorities had asked Liang to keep a low-profile because they were worried that too much hype in the media would draw unnecessary attention, the person said. China's cabinet and commerce ministry, as well as China's securities regulator, did not respond to requests for comment. As one of the few companies with a large A100 cluster, High-Flyer and DeepSeek were able to attract some of China's best research talent, two former employees said. "The key advantage of vast (computing) resources is that it allows for large-scale experimentation," said Liu, the former employee. Some Western AI entrepreneurs, like Scale AI CEO Alexandr Wang, have claimed that DeepSeek had as many as 50,000 higher-end Nvidia chips that are banned for export to China. He has not produced evidence for the allegation or responded to Reuters' requests to provide proof. DeepSeek has not responded to Wang's claims. Two former employees attributed the company's success to Liang's focus on more cost-effective AI architecture. The startup used techniques like Mixture-of-Experts (MoE) and multihead latent attention (MLA), which incur far lower computing costs, its research papers show. The MoE technique divides an AI model into different areas of expertise and activates only those related to a query, as opposed to more common architectures that use the entire model. MLA architecture allows a model to process different aspects of one piece of information simultaneously, helping it detect key details more effectively. While competitors like France's Mistral have developed models based on MoE, DeepSeek was the first firm to depend heavily on this architecture while achieving parity with more expensively built models. DeepSeek's pricing was 20 to 40 times cheaper than what OpenAI charged for equivalent models, analysts at Bernstein brokerage estimated in early February. For now, Western and Chinese tech giants have signaled plans to continue heavy AI spending, but DeepSeek's success with R1 and its earlier V3 model has prompted some to alter strategies. OpenAI cut prices this month, while Google's Gemini has introduced discounted tiers of access. Since R1's launch, OpenAI has also released an O3-Mini model that relies on less computing power. Adnan Masood of U.S. tech services provider UST told Reuters that his laboratory had run benchmarks that found R1 often used three times as many tokens, or units of data processed by the AI model, for reasoning as OpenAI's scaled-down model. STATE EMBRACE Even before R1 gripped global attention, there were signs that DeepSeek had caught Beijing's favor. In January, state media reported that Liang attended a meeting with Chinese Premier Li Qiang in Beijing as the designated representative of the AI sector, ahead of the leaders of better-known firms. The subsequent fanfare over the cost competitiveness of its models has buoyed Beijing's belief that it can out-innovate the U.S., with Chinese companies and government bodies embracing DeepSeek models at a pace that has not been offered to other firms. At least 13 Chinese city governments and 10 state-owned energy companies say they have deployed DeepSeek into their systems, while tech giants Lenovo, Baidu and Tencent - owner of China's largest social media app WeChat - have integrated DeepSeek's models into their products. Chinese leader Xi Jinping and Li "have signalled they endorse DeepSeek," said Alfred Wu, an expert on Chinese policymaking at Singapore's Lee Kuan Yew School of Public Policy. "Now everyone just endorses it." The Chinese embrace comes as governments from South Korea to Italy remove DeepSeek from national app stores, citing privacy concerns. "If DeepSeek becomes the go-to AI model across Chinese state entities, Western regulators might see this as another reason to escalate restrictions on AI chips or software collaborations," said Stephen Wu, an AI expert and founder of hedge fund Carthage Capital. Further limits on advanced AI chips are a challenge that Liang has acknowledged. "Our problem has never been funding," he told Waves in July. "It's the embargo on high-end chips." (Additional reporting by Samuel Shen, Gu Li, Larissa Liao, Aditya Soni and Shanghai Newsroom; Editing by Brenda Goh and Katerina Ang) Sign in to access your portfolio
