Chinese EV Stocks Rally Despite Delisting Threat, Broader Market Weakness
A contagious new strain of coronavirus that is making its appearance in the U.K. has unsettled the global markets. It's déjà vu of facing disruptions and lockdowns. Chinese EV stocks, however, have bucked the broader downtrend and are mostly higher.
What Happened: The year-end rally that was taking shape in the market slowed Monday morning after the U.K. reported concerns over a new strain of the coronavirus dubbed VUI-202012/01.
The S&P 500 Index, which was down about 2% in late morning trading, has cut its losses, although it's still lower at publication time. In the first trading session following S&P 500 inclusion, EV pioneer Tesla Inc (NASDAQ:TSLA) shares were down about 4.5%.
Xpeng Inc – ADR (NYSE:XPEV) is showing directionless trading, and is found moving in and out of the flat line.
The gains are despite President Trump signing a bill that seeks to delist foreign firms that don't confirm to the accounting standards set for publicly-listed U.S. companies.
Xpeng announced Monday it has begun direct delivery of its G3 SUV to customers across 28 cities and towns in Norway. The company also said it's actively exploring opportunities in other EV-mature markets with supportive government policies, advanced EV infrastructure and high EV awareness as the top priority markets.
Click here to check out Benzinga's EV Hub for the latest electric vehicles news.
Benzinga's Take: Fears of stretched valuation and equity dilution have dragged the Chinese EV stocks lower in recent sessions. The prospects for these companies are bright, considering the fact that they're operating in a market that promises potential for more than one player.
The recent pullback could be presenting an opportunity to add to positions. Especially, with respect to Nio, the upcoming Nio Day is a catalyst that can drive the stock to new highs, given its plan to launch a new sedan and announce technological and battery innovations.
Price Action: At last check, Nio was trading 3.7% higher at $48.49 and Li Auto shares were up 2.9% to $32.70. Xpeng was up 1.1% to $46.79.
© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.