Nio (NYSE:NIO) stock is up almost 10% today after Chinese regulators released a series of encouraging announcements meant to uplift investors amid the recent slowdown in Chinese equities.
Indeed, Chinese stocks are up across the board after Central Huijin, a branch of China’s sovereign wealth fund, stated it would increase investments in exchange-traded funds (ETF).
Additionally, the China Securities Regulatory Commission announced its plans to motivate institutional investors to hold common stock for longer. It will also aggressively investigate short selling and “illegal behavior” that has hurt its stock market, outright barring the former in a separate disclosure.
The efforts are clearly intended to slow down this year’s selloff, which has wiped nearly $2 trillion in market capitalization from the Chinese stock market’s 2021 peak.
The notice has worked to lift equities, with the Chinese stock index CSI300 closing up about 3.2% on Tuesday. The broader CSI500 and CSI1000 indices also climbed about 7% each following the announcement.
Unfortunately, each of the indices is well in the red year-to-date, with CSI500 and CSI1000 down 11% and 21%, respectively.
“The market grapples with complexity amid a distressed property sector, fiscal constraints of local governments, and a lack of confidence in the private sector,” noted Redmond Wong, Chief China Strategist at Saxo Markets.
NIO Stock Climbs on Regulatory Encouragement
Chinese electric vehicle (EV) maker Nio is one of the clear beneficiaries of China’s change of tone towards its equity markets. The company has endured a painful year thus far, having lost nearly 30% of its value in just a month of trade.
InvestorPlace contributor Rich Duprey has cautioned investors to be “wary of NIO stock but not dismiss it out of hand.” Whilst Matthew Farley sees it as an undervalued EV play.
In any case, today’s news should help bring back investor confidence to the fourth-largest stock exchange in the world. And NIO stock is along for the ride.
On the date of publication, Shrey Dua 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.
