Chinese EV stocks are having themselves a strong day today, Monday, July 24. That’s as a number of these stocks — as well as U.S. electric vehicle (EV) stocks — continue to barge higher.
Nio (NYSE:NIO) stock is about 12% on the day. Not only is it at new session highs, but it’s at its highest level since January. XPeng (NYSE:XPEV) is also up nicely on the day, climbing around 10% on Monday and hitting its highest levels since September.
Li Auto (NASDAQ:LI) is also up on the day, although by not nearly as much. Shares are up almost 3%.
The rally comes as other EV and EV-related stocks are higher. Perhaps most notably, Tesla (NASDAQ:TSLA) stock is up 3.3%.
However, the rally in Chinese EV stocks is not because EV charging stocks are slightly higher or because Tesla is up on the day. Instead, it’s on the news that China says it will unveil several measures to bolster its economy.
That’s not only giving these stocks a boost but others too. For instance, the iShares China Large-Cap ETF (NYSEARCA:FXI) is up about 2.3% on the day. Alibaba (NYSE:BABA) and Baidu (NASDAQ:BIDU) are up 4.2% and 5.1%, respectively.
Can Chinese EV Stocks Keep Rallying?
For the first time in what feels like ages, these stocks are enjoying an uptrend. While many of these names were buried in the bear market, bulls have been back with a vengeance.
As reported by CNBC: “A key Politburo meeting later this week will review China’s economic performance in the first half of the year… Ahead of that meeting, China has pledged to optimize the business environment for private enterprises.”
“On Monday, China’s economic planning agency announced a series of measures to promote private investment. This follows a rare joint pledge on Wednesday, between the Chinese government and the Communist Party, which vowed to treat private companies the same as state-owned enterprises.”
Earlier this month, China reported GDP growth of 6.3% for the second quarter, up 0.8% from the first quarter. While that figure would point to explosive growth in other parts of the world, it actually missed economists’ expectations. Further, the unemployment rate for young people between 16 to 24 years old hit a new record of 21.3% in June.
This helps explain why the government is looking to juice up growth. That’s why the country is looking for private investment projects “worth a total of 3.2 trillion yuan ($445 billion).” It’s trying to boost sentiment and bolster its economy.
While that doesn’t translate to direct investments in Chinese EV stocks, it does point to some form of stimulus. The hope is that an improved economy and a stronger consumer will lead to improved auto sales.
On the date of publication, Bret Kenwell 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.
