What Is the DeepSeek Effect? How Quantitative Funds Became China's AI Model Incubator (AI Translation)

DeepSeek效应几何 量化基金何成中国AI大模型孵化器

[para. 1] DeepSeek, part of the Magic Square Quantification group in Hangzhou, China, has made significant strides in AI model development, specifically with the release of their open-source pre-trained large model, DeepSeek-V3. This model debuted on December 26, 2024, with a subsequent app launch for general users on January 15, 2025. Significantly, DeepSeek's advancements have caused ripples in the international markets, most notably impacting semiconductor stocks and leading to a valuation drop for Nvidia. This indicates the profound influence DeepSeek's AI development is having on the industry worldwide.

[para. 1] Notably, the 2024 Nobel Prizes in Physics and Chemistry acknowledged the role of AI in driving a paradigm shift in scientific research. The technology now serves as a vital tool in solving complex scientific problems across diverse fields. Unexpectedly, China's breakthroughs in AI models emerged from quantitative private equity funds, a niche within the financial sector where DeepSeek is active.

[para. 2] In February 2025, Jiukun Investment, a key competitor in the quantitative investing sector, successfully replicated DeepSeek-R1 in collaboration with Microsoft Research Asia, showcasing innovative insights at the technical level. Though some insiders attributed the success to an intern and considered the difficulty manageable, the academic paper they published gained significant external attention.

[para. 2] Companies like Huanfang and Jiukun are diving into the pre-training AI race, a competitive field requiring substantial investment. Beijing Times Renaissance Investment Management Co., Ltd., leveraging its AI capabilities, achieved breakthroughs in biomedicine, focusing on a rare disease study. This project is under review by the journal *Nature*, emphasizing the collaborative potential of AI in scientific research.

[para. 3] Other quantitative private equity firms like Beiyang Quantitative and Mengxi Investment are recruiting for their AI model teams, suggesting a growing interest in integrating AI within various sectors. Their initiatives highlight a potential shift toward diverse applications and expansions in AI research and implementation.

[para. 3] Quantitative finance's inherent characteristics make it suitable for large model research. The convergence of meticulous methodologies, curiosity, and robust talent integration are key factors driving progress in AI development. Zhou Tan, founder of a quantitative firm, emphasizes the natural alignment between the fields of finance and AI, underlining the importance of continuous learning and integration.

[para. 2][para. 3] China's advantage lies in the open-source nature of AI knowledge, a vast pool of high-quality talent, and a large market, enabling Chinese firms to potentially outpace international competitors. By developing mature core businesses with stable commercial models, these firms focus on long-term AI research without the constraints of short-term financial pressures.

[para. 4][para. 5] The application of AI is not restricted to financial markets; firms like Times Renaissance apply AI models to improve global macro asset pricing and traditional investment strategies. Their advancements in knowledge discovery and synthesis capabilities, particularly within natural sciences, showcase AI’s potential for transformative impacts across industries.

[para. 6] These technological approaches, based on knowledge graphs and reinforced by AI, facilitate improved information processing and synthesis, ultimately generating new insights and innovations. By constructing automatically verified dynamic knowledge graphs, these AI models foster advances in fields like life sciences, exemplifying potential breakthroughs in biomedical research and disease treatment strategies.

[para. 6][para. 7] The utilization of knowledge graphs extends to various sectors, including medical fields, offering low-cost expansions and integration of expertise across subdomains. This capability improves diagnostic processes and drug development by linking information in structured, accessible formats.

In summary, China's advancements in large AI models, driven by quantitative private equity firms, signal a transformative influence across multiple industries. The integration of AI in financial, scientific, and medical domains exemplifies the potential for these technologies to drive significant innovation and productivity, reaffirming AI's growing role in shaping future technological landscapes.