The recent breakthroughs in China’s artificial intelligence ( AI ) technology, as exemplified by DeepSeek, will bolster profits of the AI-intensive financial sector as it substantially reduces labour costs, according to UBS.
According to Craig Cao, a financial analyst at UBS Securities, the trading business could see an 8 percent increase in net profit after generative AI reduces labor costs by 10 %, and the healthcare industry may see a 13 % increase, according to a conference on Wednesday.
The Swiss bank expects prices of brokerage and insurance companies to increase by as much as 21 and 18 per cent, respectively, this year.
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” AI is fundamentally disruptive, especially for]large language model ] -intensive jobs”, Cao said. ” When comparing across companies, the financial industry remains the president in language-based tasks”.
UBS is optimistic about Chinese brokerage and insurance companies ‘ hopes. Reuters alt=UBS is optimistic about the futures of Taiwanese trading and insurance companies. Photo: Reuters>,
DeepSeek-R1, an open-source logic type released by the Hangzhou-based start-up on January 20, has made waves in China and abroad as it showed features similar to those of designs from OpenAI, Anthropic and Google, but with significantly lower education costs.
Cao noted that, despite the current rate of generative AI implementation in all sectors being less than 10 %, the use cases in financial institutions made up as much as 37 % of the total in 2023 and 2024.
This “goes to show that there will be more instances of change and application than in many other industries,” he continued.
The awareness is important because labor accounts for a significant portion of the costs in the financial sector. Thus, reducing or reducing labor costs can lead to respectable increases in net income.
The financial information technology sector also stands to gain, with the overall market size projected to increase by 69 billion yuan ( US$ 9.5 ) through 2030, driven by higher efficiency and improved customer stickiness as a result of AI.
The image lacks a red complexion. As AI’s role in financing develops from simpler features, such as customer service, to more complex things like predicting share prices and providing investment advice, lay-offs are obvious.
While using large-scale language models can increase profits for various industries, Cao predicted that a certain percentage of people will lose their jobs.
The Hang Seng Tech Index, a benchmark tracking some of the largest mainland Chinese tech companies listed in Hong Kong, increased by about 25 % over the past month as a result of China’s AI craze.
On the assumption that more widespread AI adoption will improve business performance and efficiency, global investors have been purchasing Chinese assets.
According to Goldman Sachs ‘ projections on Monday, up to US$ 200 billion in inflows could be made into Chinese stocks over the next 12 months, and improved growth prospects could increase the fair value of Chinese equities by 15 % to 20 %.
Over the past month, the Mainland China and Hong Kong stock markets have increased in value by more than US$ 1.3 trillion in response to better sentiment.
A rare meeting on Monday between Chinese President Xi Jinping and the country’s most powerful private sector companies could bolster investor confidence in the market, with UBS’s wealth management unit describing it as the conclusion of a four-year crackdown on the tech sector.
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