The recent surge in Chinese assets following the introduction of the advanced DeepSeek-R1 model in the financial markets has caught the attention of global investors and analysts alikeSince January 14, the Nasdaq Golden Dragon China Index has experienced a remarkable increase of nearly 21%. This uptick is prominently reflected in the stocks of companies like Kingsoft Cloud (KC.US) and Alibaba (BABA.US), which have been among the major gainersThis development signals a renewed interest in Chinese tech stocks, indicating a potential shift in investment strategies amidst evolving market dynamics.

Meanwhile, the Hong Kong market has also embraced this bullish sentiment, with the Hang Seng Index climbing close to 20% during the same periodNotably, the Hang Seng Tech Index soared almost 31%, buoying the stocks of notable players such as Alibaba Health (00241.HK), Kingdee International (00268.HK), and Xiaomi Group-W (01810.HK). The robust performance in these markets suggests a growing confidence in the tech sector, which has historically been a cornerstone of the Chinese economy.

In stark contrast, A-shares have shown relatively weaker performance, albeit with the ChiNext Composite Index registering an increase of nearly 11% since mid-JanuaryThis discrepancy highlights the bifurcated nature of the market, where investor sentiment appears to favor tech-focused assets over more traditional sectors.

One cannot overlook the role of foreign institutional investors in this frenzyAnalysts from Goldman Sachs pointed out that the rise of DeepSeek signifies a pivotal transition in the AI sector, shifting focus from hardware infrastructure to software applicationsThis shift presents new opportunities for diversification in global markets, particularly for long-term value reassessment of Chinese tech stocksGoldman Sachs also revealed that as of February 7, China’s onshore and offshore stock markets collectively represented the largest nominal net buying flow in their global prime brokerage business this year.

As capital flows increasingly gravitate toward Chinese technology assets, speculation has begun to circulate about the broader implications for U.S. tech stocks

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Some investors postulate that the ongoing strengthening of Chinese assets may create a siphoning effect on funds, potentially leading to declines in U.S. tech stocks that have already experienced substantial gains.

But how valid are these concerns? On February 13, for instance, Tesla (TSLA.US) witnessed a significant rise of 5.77%, while other major tech players like Nvidia (NVDA.US) and Apple (AAPL.US) also posted gains of 3.16% and modest upticks respectivelyContrarily, companies such as Broadcom (AVGO.US) and TSMC (TSM.US) faced setbacksThe fluctuations in these tech stocks raise questions about the anticipated spillover effects from the Chinese market.

Despite the downturns linked to the emergence of DeepSeek-R1, the performance metrics from January 14 onwards suggest a mixed portfolio for U.S. tech stocksMeta (META.US) saw an increase of nearly 20%, while Apple and Nvidia recorded slight upticksNonetheless, expectations for broader market corrections continue to loom, particularly for high-flying shares like Tesla, which has endured a significant decline of 11.75% over the same period.

Overall, while it is clear that Chinese assets are likely to absorb some capital from the U.S. markets, the notion that this will lead to drastic declines in U.S. tech stocks is perhaps overstatedThe tech sector in the U.S. has already been undergoing a substantial AI-inspired bull market, thus has some inherent need for consolidation and correction in response to market forces.

However, the future trajectory of U.S. tech stocks remains a point of contention among institutional investorsFor instance, Ray Dalio, founder of Bridgewater Associates, articulated that the fervor surrounding AI has created a “bubble” reminiscent of the late 1990s dot-com eraHe expressed concerns that valuation levels have become unsustainable and hinted that interest rate risks could exacerbate vulnerabilities in the market.

Recent disclosures from the U.S

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