The last week hasn’t been kind to stocks based in China. We are seeing a huge crackdown by the Chinese government on stocks that are listed on U.S. exchanges. The response has been a huge dip across the board, but some of the hardest hit were Chinese EV stocks. Now, these stocks are on the move again this morning, but they’re going up. Is China reversing course on its regulatory threats, or is this the work of something else?
As Barron’s points out, these dips in stocks have nothing to do with the fundamental value of the companies.
In fact, they are posting some impressive numbers; Nio (NYSE:NIO), one of the stocks suffering at the hands of this market downturn, is one of the most popular EV plays of the year and one of the top gainers. Rather, the bearish turn began in just the last few days, with China reportedly preparing to bludgeon the electric vehicle industry with regulations.
Chines EV Stocks See Some Light
InvestorPlace’s William White covered the industry’s losses yesterday, and the numbers seem to suggest a major selloff. Trading volumes are quite high as many EV plays dip anywhere from 3%-16%.
This morning, a securities newspaper in mainland China is urging investors who are selling off their shares to remain calm. The newspaper remarks that these securities facing losses still have “long-term positive outlook[s],” and pegs the selloff as being prompted by misunderstanding. “The recent market decline to some extent reflects misinterpretation of policies and a venting of emotion,” it says before remarking that the fundamental values of these stocks are unchanged.
The news is helping stocks to bounce back. Investor sentiment seems to be cooling a bit around the news. Chinese EV plays like Xpeng (NYSE:XPEV) are up over 8% this morning. Nio is bouncing back by 4.5%, and Li Auto (NASDAQ:LI) is up 10%.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
View more information: https://investorplace.com/2021/07/chinese-ev-stocks-why-li-xpev-nio-stocks-are-bouncing-back-today/