China’s capital market is in need of an AI technology revolution. Despite its 40 years of development, the Chinese capital market is still considered relatively young and immature compared to its global counterparts. To catch up, there is a pressing need to address the shortcomings, especially in leveraging the recent AI technology storm led by ChatGPT.
Introducing the first valuation robot, unlocking new applications with large-scale models
“Hello everyone! My name is ‘Xiao V,’ a valuation robot based on ChatGPT,” says the voice emanating from the dialogue system. Introducing company services and answering customer queries are not novel in the realm of chatbots. However, what sets Xiao V apart is her ability to provide enterprise valuation services and engage in conversations to address valuation-related inquiries.
“This is China’s first dialogue robot developed in the field of valuation, leveraging ChatGPT technology and autonomously developed by FlowView Tech Co., Ltd.,” proudly states Zhang Xinghui, founder and CEO of FlowView Tech and a part-time professor at Wuhan University’s School of Information Management, with over ten years of experience working in Europe and the United States.
Since March of this year, ChatGPT, a phenomenon-level application developed by OpenAI, has taken the world by storm. Renowned entrepreneur Jensen Huang, co-founder of NVIDIA, referred to it as the “iPhone moment of AI.” The breakthrough achieved by OpenAI’s ChatGPT can be attributed to the convergence of large-scale language models (LLMs) with big data, immense computing power, and substantial investments at the right moment, resulting in the emergence of what is known as the “brute force aesthetics” and the “intelligence explosion.”
Riding the wave, numerous Chinese internet giants have made high-profile announcements about having their own large-scale models, such as Baidu’s “Wenxin Yiyuan” and Alibaba’s “Tongyi Qianwen.” Whether these claims are true or merely PR tactics remains uncertain. However, many experts believe that, in the current scenario, it is extremely challenging for Chinese companies, especially small and medium-sized enterprises, to make significant progress in the realm of large-scale models. From a business perspective, exploring innovative applications in vertical domains would be the right direction and path.
“The development history of behemoth companies like Microsoft, Google, and Facebook clearly demonstrates the harsh reality of winner-takes-all in the digital economy era. Therefore, we seized the opportunity and developed the valuation robot, Xiao V,” emphasizes Zhang Xinghui confidently. “Xiao V is the nickname, abbreviated as V-Bot, with the full name Valuation Robot.”
As known, Xiao V is developed on the ChatGPT 3.5 framework. “ChatGPT serves as an auxiliary tool for valuation. The core strengths lie in our company’s self-developed valuation models, accumulated valuation databases over the years, and the application of cutting-edge digital technologies,” explains Zhang Xinghui. Established in December 2016, FlowView Tech has been devoted to the research and development of AI products in the capital market. The company’s Manju AI series of products has reached over 20, with Xiao V being the latest addition.
Valuation is the soul of all investment and financing activities, and utilizing technology for valuation is the way forward.
The introduction of the valuation robot, Xiao V, has injected vitality into China’s valuation domain, signaling a wake-up call for the country’s investment and financing community. Valuation has long been recognized as a professional and increasingly sophisticated technical process in mature international markets. Notable investment banks like Goldman Sachs have openly declared themselves as “high-tech companies.” Morgan Stanley, another renowned investment bank, has set one of its hiring standards as proficiency in Python. BlackRock, the world’s largest asset management company, has developed the advanced and intricate Aladdin platform.
In the face of the intricate financial market, the core aspect that demands attention has been made clear by finance experts. Warren Buffett once said that if business schools were to offer only one course, it should be “a dull and necessary course on valuation.” Hong Lei, former chairman of the China Securities Investment Fund Association, publicly declared that valuation is the “core competency” of fund managers.
However, valuation has not been given the serious attention it deserves in China’s capital market, particularly in the primary market, where issues such as blindly following trends, haphazard decision-making, and excessive pricing prevail. To address this, the China Securities Investment Fund Association released the “Guidelines for Valuation of Non-Listed Equity Investments by Private Investment Funds (Trial)” in 2018, clearly stating its aim to guide professional valuation practices.
According to Zhang Xinghui, valuation can be categorized into three types: ignorant valuation, professional valuation, and subjective valuation. Currently, most of China’s primary market remains in the first stage, lacking a universally accepted and professional approach. Valuation based on subjective factors mainly refers to the valuation influenced by people’s inherent greed and fear. Professional valuation, on the other hand, is based on legal regulations, internationally recognized practices, and widely accepted valuation models.
FlowView Tech has consistently pursued a path of professional valuation driven by technology. “From the very beginning, we built our technological framework using a well-established branch of artificial intelligence called expert systems (ES). We adhere to innovation and the application of cutting-edge digital technologies, and have built our own proprietary databases, model libraries, and knowledge rule libraries,” explains Liu Xiaobo, Chief Technology Officer of FlowView Tech. Liu Xiaobo has extensive expertise in machine learning and deep learning technologies and previously served as the architecture designer for AI intelligence at JD Logistics.
Additionally, FlowView Tech’s AI valuation system boasts distinctive features. “We have developed a valuation index system with independent intellectual property rights,” reveals Su Zhengyu, Chief Valuation Officer of FlowView Tech. Su Zhengyu, a co-founder of FlowView Tech, is also a member of the International Institute of Valuation Analysts. She says with a smile, “I often attend international valuation conferences to exchange valuation techniques and practical experiences with international peers.” She proudly adds, “Our AI valuation has received universal acclaim from international colleagues.”
Over the past seven years, FlowView Tech has iterated its products, upgraded its technology, and consistently provided high-quality services to a wide range of clients and the capital market under the umbrella of its Manju AI brand. To understand how Manju AI works, it can be likened to a continuously operating mechanical machine that receives inputs and produces various reports essential for investment and financing, including valuation reports, due diligence reports, business plans, financial alert reports, and post-investment management reports.
“To put it simply, the Manju AI series of products utilize intelligent software to generate a range of reports required for investment and financing,” explains Zhang Xinghui. “These reports are collectively referred to as AI-generated content (AIGC).”
To enhance the professionalism and authority of Manju AI, FlowView Tech actively participates in the formulation of national valuation standards, such as the “National Regional Equity Market Valuation Guidelines” and the “Chinese Small and Medium-sized Enterprise Valuation Standards.” Moreover, FlowView Tech holds over 30 software copyrights directly related to enterprise valuation and is a corporate member of the International Institute of Valuation Analysts. In practice, FlowView Tech has become a valuation provider for the Shenzhen Stock Exchange’s KRC Platform and over 20 equity trading centers nationwide, serving tens of thousands of companies.
“With over 40 million small and medium-sized enterprises in China, it is imperative to provide them with professional services, and utilizing technological means, especially the enormous potential of AI,” emphasizes Zhang Xinghui. “Xiao V’s emergence represents the latest application of cutting-edge AI technology in China’s capital market, particularly in the valuation field. In the future, while providing professional and efficient valuation services, Xiao V will contribute to the standardized, technological, and digital development of China’s capital market.”
The urgent need for scientific and effective valuation tools necessitates an AI technology revolution, with “Zhongtegu” calling for an AI revolution
Perhaps China Securities Regulatory Commission (CSRC) Chairman Yi Huiman has long realized the significance of valuation in all transactions, especially in capital transactions. Therefore, in November 2022, he publicly expressed the need to explore and establish a “valuation system with Chinese characteristics (Zhongtegu).”
Experts widely recognize that Zhongtegu fundamentally aims to guide the market in discovering reasonable methods for valuing and pricing high-quality assets, fostering the high-quality development of both state-owned and private enterprises. Consequently, valuation, once considered an implicit necessity, will become an explicit demand, creating vast market potential.
From the perspective of fund management, Chinese fund institutions currently manage over CNY 20 trillion in total funds, with more than 60% being government-backed. As taxpayers’ money is involved, strict supervision is crucial. According to sources, in the near future, all government-backed funds investing in equities will be required to submit “valuation report filings” for record-keeping and inspection.
“Three years ago, FlowView Tech developed two products, the government-backed fund performance evaluation system and the government-backed fund valuation system,” confidently states Zhang Xinghui. “These two products will undoubtedly play a significant role in the future.”
In recent years, the Chinese central government has been introducing policies to encourage financial services for the real economy, urging financial institutions to innovate financial products and expand financing channels for small and medium-sized enterprises (SMEs). However, in practice, financial institutions have struggled to identify the quality of enterprises and enhance their risk management capabilities due to the lack of effective means. In the context of investment scenes that emphasize investing in high-tech and hard-tech, it is often joked that the most advanced technology used by Chinese investors is Microsoft Excel, which is both amusing and ironic.
Currently, ChatGPT has emerged and ignited a new wave of AI technology. Developed nations such as the United States and Europe have publicly declared their readiness to harness the enormous potential of AI technology. The Chinese government has also introduced relevant policies to actively support AI technology development, particularly encouraging innovative AI applications.
Undoubtedly, AIGC represents the latest and largest innovative application. Some projections estimate that by 2032, the total revenue of the AIGC market will grow from USD 40 billion in the previous year to USD 13 trillion, with an expected 32-fold increase in the span of ten years.
As the concept of AIGC becomes more widely recognized and technology continues to advance, AI technology will find broader applications in the capital market.
“It is foreseeable that more, better, and more suitable ‘Xiao Vs’ will emerge, perfectly in tune with the rhythm of the AI era,” confidently believes Zhang Xinghui. “It is highly likely that China’s capital market is on the verge of an AI technology revolution.”
This AI technology revolution will not only prompt the adoption of more AI technologies within the capital market but also bring revolutionary changes to all aspects of human society. Source