DeepSeek vs Trump tariffs: how will China’s markets react in the Year of the Snake?

Investors returning to mainland China’s markets on Wednesday after an eight-day Lunar New Year holiday have plenty to chew on – from Chinese artificial intelligence (AI) start-up DeepSeek taking the world by storm to the US slapping tariffs on Chinese goods.

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While the market outlook remains cloudy because of the strained US-China ties, tech companies with a focus on AI are expected to jump on the back of developments from DeepSeek, according to analysts. Companies in export-oriented sectors such as textiles, home appliances, electronics and chemicals could take a beating, they added.

Investors may prefer to sit on the sidelines as they wait for the outcome of a call between US President Donald Trump and Chinese President Xi Jinping this week, as the world’s two largest economies seek to avert a full-blown trade war.

“Technology firms will be greeted with fanfare by investors because of the emergence of DeepSeek, but a rally in tech stocks will not be enough to ensure a roaring start for the overall market after the holiday,” said Ivan Li, a fund manager at Loyal Wealth Management in Shanghai, on Tuesday.

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Trump: Chinese AI start-up DeepSeek’s strong showing a ‘wake-up call’ for US tech sector

Trump: Chinese AI start-up DeepSeek’s strong showing a ‘wake-up call’ for US tech sector

Last month, the Hangzhou-based DeepSeek released two powerful new large language models built at a fraction of the cost and computing power used by American firms. Its performance proved to be on par with ChatGPT, the generative AI chatbot developed by global leader OpenAI.

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After the Trump administration unveiled a 10 per cent tariff on Chinese exports over the weekend, Beijing retaliated on Tuesday, imposing tariffs of 15 per cent on US coal and liquefied natural gas, as well as 10 per cent on crude oil, agricultural machinery, high-emission cars and pickup trucks.

  

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