Shares of Chinese electric vehicle (EV) stocks are up today. Currently, Nio (NYSE:NIO) is up more than 20%. Meanwhile, the two Chinese electric vehicle stocks Li-Auto (NASDAQ:LI) and Xpeng (NYSE:XPEV) are trading up more than 25%.
After a tumultuous few months of delistings and regulatory fears, these three names are finally seeing their price increase. Moreover, the Hang Seng Index closed up 9% today, marking the index’s best day of gains since October 2008.
What can explain the price action behind NIO, LI and XPEV stocks? Here’s what investors need to know about Chinese electric vehicle stocks right now.
Why are NIO, Li and XPEV stocks up today?
Currently, Chinese electric vehicle stocks are rising after The People’s Bank of China (PBOC) – China’s central bank – has pledged to ease regulatory repression and “ensure the stability of capital markets”. The PBOC also said it would support overseas stock listings. To do this, the bank plans to develop a cooperation plan with US regulators regarding Chinese stocks listed in the United States.
This news is a huge relief for many investors. The market caps of names like NIO stock and XPEV have been hammered since 2022 first kicked off. Prior to today, Nio and Xpeng were down more than 50% year-to-date (YTD).
Other than a plan to cooperate with U.S. regulators, the PBOC did not specify how it would implement overseas listing support. However, the announcement was still received positively as it shows that China is aware of investors’ concerns. Saxo Bank’s Peter Garnry believes the announcement means China is forgoing its strict regulations. Garry explained:
“It confirms that the Chinese government considers healthy and strong equity markets to be essential for the future of the country. The equity market is totally sentiment driven right now and everyone is looking for an excuse to buy, even if the Headwinds for Chinese equities are still huge.
What’s next for Chinese electric vehicle stocks?
Going forward, the threat of Chinese regulatory enforcement appears to have lessened. Of course, it’s still unclear whether the US will waive the Holding Foreign Companies Accountable Act (HFCAA). However, Chinese electric vehicle stocks are expected to remain listed on US exchanges as long as China is willing to let US auditors audit their financial statements.
At the date of publication, Eddie Pan held (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.