SHANGHAI: China stocks ended higher on Tuesday and Hong Kong shares recovered losses, defying a regional gloom after Wall Street’s sharp declines, in a sign of growing confidence in China’s economy following the rise of DeepSeek.

China’s blue-chip CSI 300 Index climbed 0.3%, and the Shanghai Composite Index gained 0.4%, both recouping the 0.5% loss in morning trading.

In Hong Kong, the benchmark Hang Seng Index ended the session flat, after falling as much as 2.1%.

In contrast, the broader Asian market fell sharply on Tuesday as a market sell-off extended on mounting worries that a wide-ranging trade war could dent US economic growth and lead to a recession. US stocks plunged on Monday, with the S&P 500 recording its biggest one-day drop in nearly three months.

“US exceptionalism is at least pausing,” Citi said in a note to clients. “We therefore downgrade US equities to neutral, upgrade China to overweight.”

Pacific Securities said the US policies actually “Make Others Great Again”, in a jibe at Trump’s “Make America Great Again” mantra.

Despite the recent correction, the Chinese brokerage said the country’s tech-led bull run still has legs.

Even as Trump hiked tariffs on China, “sentiment toward the Chinese economy has continued to improve,” said Goldman Sachs.

The meteoric rise of Chinese AI startup DeepSeek has

fuelled optimism in the country’s economy, with Goldman pulling forward its estimated AI boost to China’s GDP growth, expecting an impact to start in 2026. However, following the recent surge in tech shares, money appears to be rotating into cyclical stocks.