Shares Of Chinese Companies Linked To Deepseek Surged On The First Post-holiday Trading Day

Broader Chinese markets fell on Wednesday.

Wang Zhao/AFP/Getty Images

• China's AI tech stocks surged after the Chinese New Year public holidays.
• DeepSeek's rise challenges Western AI dominance and boosts Chinese tech sector confidence.
• However, broader Chinese markets fell amid US-China trade war jitters.

DeepSeek-related Chinese tech stocks surged on Wednesday, despite trade war jitters that hit the broader market.

Last week, affordable Chinese AI open-source chatbot DeepSeek took the world by storm, with a new model that raised questions over Silicon Valley's massive spending spree on the technology. US AI-related shares tanked.

Mainland Chinese stock markets reopened on Wednesday after a weeklong holiday. DeepSeek's Chinese partners, including Merit Interact, Philisense Tech, and TRS Info Tech, all surged 20%.

China's tech-heavy STAR 50 Index on the Shanghai Stock Exchange rose 2.9%, while China's CSI Robot Index closed 4.2% higher.

The rally came as DeepSeek's emergence sets the stage for tech's breakout moment for China. It marks a serious challenge to the capital-intensive AI model development that has long been dominated by Western firms, Dilin Wu, a research strategist at brokerage Pepperstone, told Business Insider.

"This shift is lowering industry barriers and proving the resilience of China's tech sector, sending a strong signal to traders. With US tech valuations stretched and under constant scrutiny, China and Hong Kong's tech stocks — offering lower valuations and higher growth potential — are becoming increasingly hard to ignore," said Wu.

The optimism in China's AI stocks wasn't reflected in China's broader markets, which were rocked by news that USPS has stopped accepting inbound packages from China and Hong Kong.

E-commerce giant JD.com ended 3.5% lower in Hong Kong.

Mainland's CSI 300 Index closed 0.6% lower, while the Shanghai Composite Index closed down 0.7%. Hong Kong's Hang Seng Index closed 0.9% lower.

"A headlines-driven market seems synonymous with Trump 2.0, much like in 2016," wrote Yeap Jun Rong, a market strategist at online trading provider IG, on Tuesday.