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

  • Chinese EV stocks are getting hammered today as investors price in a series of headwinds into these stocks.
  • Geopolitical concerns due to Russia’s ties to China, more potential lockdowns and a Fed rate hike decision are dominating the discussion.
  • From here, the market is appearing to take a cautious view of high-growth China-based stocks.
Chinese EV stocks - Why Are Chinese EV Stocks NIO, LI, XPEV Down Today?

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Today, Chinese EV stocks remain in focus for investors. That’s because market-leading companies in the electric vehicle sector Nio (NYSE:NIO), Li Auto (NASDAQ:LI) and Xpeng (NYSE:XPEV) are all down between 8% and 11% as of 1:00 pm EST.

These sorts of moves are indicative of some major news. As it happens, Russia’s recent comments on the annexation of parts of Ukraine, as well as today’s speech from President Joe Biden at the United Nations, appears to have provided the geopolitical catalyst for this move.

Put simply, it appears Russia’s ties to China may put geopolitical pressure on countries looking to sanction Russia. Nio, Li and Xpeng are all dominant players in the domestic Chinese market. However, these companies have indicated intentions of expanding abroad. Should Western countries look to put pressure on Russia indirectly, such stocks could feel the impact.

Additionally, lockdown concerns remain high in the domestic Chinese market. China’s leader, Xi Jinping, appears to be unwavering in his zero-Covid stance. Alongside more rate hikes on the horizon today, these catalysts appear to be simply too many for investors to ignore.

Let’s dive into what investors may want to make of this price action.

Are Chinese EV Stocks Worth a Look On This Dip?

Like all stocks in the market, China-based EV manufacturers are likely to remain volatile, particularly as interest rates rise. That said, today’s divergence among this group of stocks is notable. It’s clear various China-based concerns are dominating investors’ views right now.

Whether this pervasively bearish market sentiment will abate anytime soon remains to be seen. That said, for those who like the long-term growth fundamentals these businesses provide, perhaps this dip is an excellent buying opportunity. After all, returns are based largely on where a stock is bought, rather than sold.

That said, I think the market’s cautious tone on this sector right now is warranted. There are too many unknown variables to consider. And in this market, most are taking the view that certainty is worth a premium.

On the date of publication, Chris MacDonald 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.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.


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