Why Are Chinese EV Stocks NIO, XPEV, LI Down Today?

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  • China imposed new Covid-19 restrictions over the weekend.
  • As a result, a number of Chinese EV stocks are moving lower today.
  • Three electric vehicle (EV) makers — Nio (NIO), Xpeng (XPEV) and Li Auto (LI) — have been trending this morning.
Chinese EV stocks - Why Are Chinese EV Stocks NIO, XPEV, LI Down Today?

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Over the weekend, China imposed new restrictions in the nation’s ongoing fight to contain the spread of Covid-19. Consequently, multiple Chinese electric vehicle (EV) stocks immediately went into the red this morning. Among the most notable names to get sold off were Nio (NYSE:NIO), Xpeng (NYSE:XPEV) and Li Auto (NASDAQ:LI).

Perhaps traders of these stocks were blindsided by the fresh round of constraints, as Shanghai and Beijing had recently relaxed their Covid-19 restrictions. However, now some businesses in these two big Chinese cities will have to prepare for various restrictions.

First of all, seven of Shanghai’s 16 districts — including financial and downtown districts — are reportedly conducting mass Covid-19 testing. Furthermore, residents in the affected areas will be required to stay home until the testing is finished. Also, in Beijing, at least three districts have ordered bars and some other entertainment venues to close until further notice.

It was only a week ago that Beijing had permitted restaurants to resume serving customers inside stores. But now that Covid-19 cases appear to be on the rise, with Mainland China reporting 30 new confirmed cases recently, it’s evident that these Chinese cities aren’t taking any chances now.

What’s Happening With Chinese EV Stocks?

The evident renewal of China’s zero-Covid policies took a toll on the broad-based Shanghai Composite Index, as it was down more than 1% midday today local time. Certain Chinese EV stocks were hit particularly hard, however.

By 11:30 a.m. Eastern Time, both NIO and XPEV stock were down 8%. LI stock, meanwhile, fell 3%. Traders might wonder, then, why are these stocks were dropping faster than the Shanghai index?

It’s hard to know for certain, but perhaps investors were particularly concerned about a market segment that was already on shaky ground. Global concerns such as inflation and supply-chain constraints had already posed challenges to EV manufacturers.

The last thing these EV makers need, then, is a fresh round of restrictions. Or at least, that’s what today’s financial market traders might be thinking. It’s a difficult situation for everyone concerned, and for now, the sentiment has definitely soured on Chinese EV stocks.

On the date of publication, David Moadel 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.


Article printed from InvestorPlace Media, https://investorplace.com/2022/07/why-are-chinese-ev-stocks-nio-xpev-li-down-today/.

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