Welcome to this week’s edition of top stock market highlights.
China’s DeepSeek
China stunned the artificial intelligence (AI) world with the release of DeepSeek, a new AI tool that purportedly boasts the same capabilities as some of the world’s best AI engines.
The clincher is that these capabilities were developed at a fraction of the cost incurred by large technology companies such as Microsoft (NASDAQ: MSFT), Alphabet (NASDAQ: GOOGL), and Meta Platforms (NASDAQ: META).
DeepSeek was reportedly built for less than US$6 million, but analysts have expressed doubts over this figure as they wonder if it accounted for prior research, development, and other expenses.
Nvidia (NASDAQ: NVDA), along with other technology firms, suffered a sharp plunge as part of a global sell-off as investors questioned the US’s leadership in the AI sector and whether these trillion-dollar companies could stay competitive.
In particular, Nvidia, which manufactures graphics processing units (GPUs) that are used to train the AI models from the large technology firms, plunged by nearly 17% a day after news of DeepSeek broke.
Other chipmakers such as Micron (NASDAQ: MU), ARM Holdings (NASDAQ: ARM), and Broadcom (NASDAQ: AVGO) also fell by more than 11%, 10%, and 17%, respectively.
DeepSeek’s large language model is free and open-sourced and was released back in late December 2024.
In addition, the Chinese AI start-up also launched a reasoning model that outperformed OpenAI’s latest.
OpenAI is the developer of the popular ChatGPT generative AI software back in 2022 that represented a breakdown in the AI space.
The technology sector was not the only one hit, though.
Investors were concerned that AI capabilities could be achieved with more affordable hardware solutions and, therefore, could dampen the demand outlook for high-quality data centres.
Hence, data centre REITs were also badly hit by the news.
Keppel DC REIT (SGX: AJBU) plunged 8% while Mapletree Industrial Trust (SGX: ME8U) declined by 2.7%.
Despite the pessimism, some analysts are wondering if the sell-off may be an overreaction as it is still early days for the AI race and there could be many more developments that will boost the overall sector.
DBS Group (SGX: D05)
DBS announced that it had acquired an additional stake in Shenzhen Rural Commercial Bank (SZRCB).
A total of 281.6 million SZRCB shares were acquired at RMB 5.67 (around S$1.05) per share, taking Singapore’s largest bank’s stake from 16.69% to 19.4%.
The purchase was made at a price-to-book ratio of 1.05 times of SZRCB’s book value as of the third quarter of 2024.
The total consideration paid amounted to around S$295 million.
As a recap, DBS first acquired a stake of 13% in SZRCB back in October 2021 and subsequently increased its investment in the Chinese lender to 16.69% in January 2024.
This transaction is funded using internal resources and is in line with the blue-chip group’s strategy to invest in its core markets and expand its exposure to the Greater Bay area.
The increase in DBS’s stake in SZRCB will be immediately accretive to earnings and return on equity.
Mapletree Investments Pte Ltd
Mapletree Investments Pte Ltd, or MIPL, acquired its first logistics property in the UK.
The purchase was also accompanied by 10 warehouses in Spain that brought the total acquisition price to around S$444.5 million.
MIPL is seeding its second European logistics-focused fund and these assets, which total around 256,000 square metres, will be part of the seed assets.
The investment firm is also seeking to deepen its focus on the logistics sector and expand its global footprint
The fund will be launched once sufficient scale has been attained.
The group looks forward to these assets contributing steady and recurring returns over the long term.
Following these acquisitions, MIPL will own 80 logistics assets across eight countries in Europe.
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Disclosure: Royston Yang owns shares of Meta Platforms, Alphabet, Keppel DC REIT, Mapletree Industrial Trust, and DBS Group.
