Schroder Investments: Maintains a "neutral" rating on the mainland China and Hong Kong stock markets.

Deep Seek has sparked a wave of artificial intelligence, benefiting the mainland China and Hong Kong stock markets. Shek Hong-ju, Director of Diversified Asset Investments at Schroders Global, said that in addition to the stimulus from Deep Seek, it is also important to know whether the central government will introduce substantial measures to support the economy. The market expects more substantial measures to be announced during the March two sessions, leading to a more sustained uptrend in the overall market. Currently, the mainland China and Hong Kong stock markets are rated "neutral". Shek Hong-ju said that MSCI China rose 30% last year, and the Hang Seng Index has already risen 8 to 9% since the beginning of the year. If the Chinese government introduces more measures to support the economy, there will be more confidence in investing in the Hong Kong and A-share markets. Currently, fueled by the Deep Seek wave and IT stocks, the offshore Chinese market has an advantage. If China introduces substantial stimulus policies, it will be more beneficial for local companies, and attention will then shift to the onshore market, such as the consumer sector. Regarding Trump's 10% tariff on Chinese imports, Shek Hong-ju pointed out that this is in line with Schroders Global's predictions, and many Chinese companies have already made arrangements to shift their production chains to Southeast Asia. Therefore, the impact of tariffs on investors is not too significant, and the overall market trend is not too pessimistic. Gan Zhuoheng, Head of Asian Equities ex-Japan at Schroders Global, stated that their main regional funds are currently underweight in mainland China and Hong Kong stocks. Due to attractive valuations, they have slowly started to increase their positions over the past 6 months and have adopted a "bottom-up" strategy to select individual companies. With the recent development of Deep Seek, they will focus on more edge AI-related companies.