Surging Interest in Chinese Technology Shares Among South Korean Investors

Chinese technology shares are thriving, notably due to advances in AI by DeepSeek and strong government backing. South Korean investors are increasing their stakes in Chinese tech stocks, with substantial trading activity recorded. Analysts predict that the Chinese stock market will attract more foreign investments due to its low valuations and growth potential. Comparatively, South Korea’s market has seen lackluster performance, enhancing the appeal of Chinese equities.

China’s technology sector is experiencing significant growth, drawing considerable foreign interest, particularly from South Korean investors. The recent advancements in artificial intelligence by DeepSeek, a company based in Hangzhou, are heightening perceptions of value in Chinese equities aligned with innovative technologies. This surge contrasts sharply with the declining performance of technology shares in New York’s Nasdaq market, which has entered correction territory.

Foreign Minister Wang Yi’s recent remarks, which positioned China as an “anchor of stability” against global tensions, further bolster investor confidence in the Chinese market. Haitong Securities noted that the performance of China’s tech shares has notably improved since the beginning of this year due to new concepts promoted by DeepSeek and the government’s strong support for the sector.

Prominent investment banks, including Goldman Sachs and Morgan Stanley, have released positive analyses regarding investments in China, highlighting the country’s technological innovations as key drivers of economic growth. The trend is particularly evident in South Korea, where investors have substantially increased their holdings in Chinese technology stocks. Reports indicate that trading of these shares reached a 30-month high of US$782 million in February.

The increase in South Korean investments in China’s markets reveals a dramatic rise, with trading nearly tripling since January—surpassing activity in European and Japanese stocks. Of note, six of the top ten foreign stocks purchased by South Korean investors between mid-February and late February were Chinese tech equities, particularly those in the electric vehicle, AI, and semiconductor sectors.

Xiaomi Corp emerged as the most coveted stock with a trading value of US$72.4 million, followed by electric vehicle manufacturer BYD and Alibaba Group, a significant player in both e-commerce and AI technology. In contrast, South Korea’s domestic stock market has shown subdued performance, with the Korean Composite Stock Price Index rising less than 2 percent since February. Meanwhile, Shanghai’s STAR 50 Index and the Hang Seng Tech Index have seen impressive increases of over 15 percent and 43 percent, respectively.

Analysts such as Edward Cole from Man Group Plc indicate that the Chinese stock market is poised to emerge as one of the most attractive markets by 2025. He points out that China’s market valuations remain low compared to other major markets, which presents foreign investors with promising safety margins and potential returns.

In summary, the ascent of Chinese technology shares is primarily driven by advancements in AI and government support, attracting significant foreign investment, notably from South Korea. Investment banks are optimistic regarding China’s market potential, especially as it continues to outperform other markets. Despite South Korea’s own stock market challenges, the growing interest in Chinese equities signals a shifting landscape that could lead to substantial returns for foreign investors in the coming years.

Original Source: www.shine.cn