Shares of EHang (NASDAQ:EH) are flying higher this morning and are up over 8% at the time of writing. The autonomous aerial vehicle (AAV) company has had a rough past year. Indeed, shares of EH stock hit an all-time high of $129 last year before quickly running out of fuel. Today, shares trade in the $17 range, a far cry from its all-time high. However, a preorder from a Japanese company is giving shareholders of EHang some hope today.
Today, EHang announced that AirX, a Japanese air mobility platform company, had preordered 50 units of its EH216 AAV. This marks the largest preorder EHang has ever received from Japan. In addition, AirX plans on using the EH216 AAVs for a variety of urban air mobility (UAM) projects in Japan. AirX may also use the autonomous aircrafts to provide “air taxi” services for the 2025 World Expo event.
The founder and CEO of AirX, Tezuka Kiwamu, praised the transaction, adding that, “By leveraging the advantages of autonomous flight technologies and centralized management, the EH216 AAVs can provide customers with cost-effective aerial sightseeing services, which is why AirX selects EHang as a partner in the global eVTOL market.”
However, the preorder isn’t the only catalyst affecting EH stock today.
EH Stock: China’s Central Bank Cuts Lending Rates
China’s central bank recently lowered the one-year loan prime rate by 10 basis points (bps) to 3.7%. The central bank also cut the five-year loan prime rate by five bps to 4.6%. Furthermore, the reduction of the five-year loan prime rate marked the first reduction since April 2020. This reduction in rates is significant because the loan prime rate serves as a benchmark for corporate and household loans in China. When the interest rate on loans are lowered, companies are incentivized to borrow more because they will pay a lower interest rate. As a result, lower interest rates can drive higher future growth.
Chinese companies are reacting well to this news. Popular Chinese names like Nio (NYSE:NIO) and JD (NASDAQ:JD) are both trading higher by more than 5% today. On top of that, the iShares China Large-Cap ETF (NYSEARCA:FXI) is up over 4%.
Capital Economics economist Sheana Yue noted that she expects additional rate cuts in the following month. Yue also reasoned that “Today’s cut will immediately feed through to outstanding floating rate business loans and should also lead to cheaper loans for new fixed rate borrowers.”
On the date of publication, Eddie Pan did not hold (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.
