(Bloomberg) — Emerging-market equities climbed to a three-month high, lifted by improved sentiment in China after Tencent Holdings Ltd. moved to integrate DeepSeek’s AI model and as Beijing signaled endorsement of the private sector, seen as key in reviving economic growth.
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The MSCI emerging-market equities gauge rose 0.5% as shares of Tencent, its second-biggest component, jumped to the highest since 2021 after DeepSeek debuted on the big tech company’s WeChat social media platform. It joins a wave of government bodies and service providers embracing DeepSeek’s software — which it claims to be cheaper than those offered by US big tech — across China.
“The DeepSeek-driven rally appears to have further upside in the short term, supported by relatively low valuations, growing optimism that China’s tech innovation could surpass the US, and accelerating AI adoption,” said James Ooi, a Singapore-based market strategist at Tiger Brokers.
The favorable sentiment for emerging equities was further boosted by Chinese President Xi Jinping’s meeting with prominent entrepreneurs, fueling hopes that the country’s authorities may adopt a more business-friendly stance. Those invited to the event with the nation’s top leaders include Alibaba Group Holding Ltd. co-founder Jack Ma and DeepSeek founder Liang Wenfeng.
China tech stocks “continue to deserve an overweight in Asian investors portfolios,” as DeepSeek has reignited investor focus on the technological prowess of these companies, Nomura Holdings Inc. strategists including Chetan Seth wrote in a Feb. 16 note. These “developments should further alleviate the discount on China stocks” relative to US tech shares, they added.
Thin trading
MSCI’s currency index, meanwhile, gained 0.1% on Monday. Trading volumes remained thin because of the President’s Day holiday in the US. The Chilean peso fell 0.7%, the worst performer among developing world currencies, as copper prices retreated.
In Latin America, Argentina’s benchmark S&P Merval Index saw its biggest one-day drop since July, falling some 5.6% as investors assessed the the fallout from Argentine President Javier Milei’s promotion of the Libra token — a cryptocurrency — which led to an internal government probe.
The Panama Canal’s administration hired law firm Vinson & Elkins to defend the interests of the waterway as tensions with the US around its management mount, local media reported. President Trump has said he wants the US to retake control of the waterway, which is a key route for international trade and shipping.
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