Wall Street "looks far ahead": Chinese assets shift from "tradable" to "investable"

After UBS and Goldman Sachs, another Wall Street giant stands behind DeepSeek: the global capital investment logic for the Chinese stock market has changed!

Bank of America analysts, including Winnie Wu, stated in their latest research report that DeepSeek's breakthrough progress is prompting global investors to reassess the value of Chinese assets, with the Chinese stock market shifting from "tradable" to "investable."

Since the beginning of 2025, the Hang Seng Tech Index has led the world with a 23% increase, and the MSCI China Index's price-to-earnings ratio has rebounded to 11.3 times, approaching the previous highs of January 2023 and October 2024. Behind these numbers is a deep logical evolution in the reassessment of the value of the Chinese market by international institutional investors.

The report states that despite the excellent performance of Chinese assets over the past year, many investors still view it as a "trading market," quickly entering and exiting funds in search of short-term trading opportunities, with long-term capital participating less.

However, this fundamental investment logic is now changing. The report indicates that as regulators take measures to enhance shareholder returns, promote the "value enhancement" of state-owned enterprises, and introduce "long-term patient capital" such as insurance funds to increase stock allocations, coupled with DeepSeek acting as a catalyst, the Chinese stock market is regaining the favor of long-term funds.

The report further points out that DeepSeek could become an important turning point similar to Alibaba's IPO in 2014, as its emergence has changed the narrative around Chinese tech stocks, is expected to stimulate a cluster effect of new economy enterprises, and create widespread optimism regarding economic growth, employment, and income, thereby attracting global long-term capital back to the Chinese market.

Earlier, Goldman Sachs also released a report stating that DeepSeek has triggered a reassessment of the value of Chinese assets, and investing in the Chinese stock market requires a new AI investment framework.

Goldman Sachs expects that the widespread adoption of AI will increase the earnings per share (EPS) of Chinese companies by 2.5% annually over the next decade. Improved growth prospects and potential confidence boosts could raise the fair value of the Chinese stock market by 15-20% and possibly attract over $200 billion in portfolio inflows