Chinese electric-vehicle shares take a tumble in Hong Kong
Friday saw shares in Chinese electric-vehicle makers take a tumble in Hong Kong, as worries about the future growth of the sector continue to mount.
Shares of Chinese electric-vehicle makers tumbled on Friday as concerns about the sector's growth prospects mounted. The sell-off came as analysts warned that the electric-vehicle market in China, the world's largest, may be cooling off after years of red-hot growth.
The sharp decline in Li Auto Inc.'s share price led the losses among Chinese electric-vehicle start ups on Tuesday, with shares falling by 15%. Nio Inc. and XPeng Inc. also saw their share prices tumble by over 6%, while sector bellwether BYD Co. saw a more modest decline of 3.7%.
Electric-vehicle makers in China have seen their fortunes decline in recent months as global growth slows and concerns mount about the sector's valuations. Negative headlines, including a reduction in Warren Buffett's stake in BYD, have further hurt sentiment. However, some believe that the sector still has potential despite the challenges it faces.
While there is some market speculation that Li Auto's L8 orders may be weaker than expected, Daisy Li, fund manager at EFG Asset Management, remains optimistic about the company's future. While electric vehicle demand may be waning in the short-term, Li believes that the market will rebound in the long-term. As such, she remains confident in the company's ability to weather the current market conditions and emerge victorious.
There is no doubt that the auto industry is facing some challenges at the moment. Weakened holiday orders are just the latest sign that things are not as rosy as they could be. However, it is important to remember that the companies typically do not release standalone data on holiday orders. So, investors will need to wait until next month to assess their monthly sales. In the meantime, we will continue to closely monitor the situation and report on any new developments.
The outbreak of Covid-19 has resulted in severe disruptions to the global supply chain, and auto manufacturers have been among the hardest hit. In response to the situation, Microsoft has announced that it is cutting production targets for two leading Chinese electric vehicle makers, Li Auto and XPeng. The move is a sign of the challenges that the auto industry faces in the wake of the pandemic, as factories struggle to restart operations and consumers remain reluctant to purchase new vehicles.
The electric vehicle sector has been under pressure lately, with Tesla's lackluster delivery numbers and the disastrous trading debut of Zhejiang Leapmotor Technologies Ltd. contributing to weak sentiment in the industry. However, Tesla remains the leader in the space, and with continued innovation and execution, the company should be able to maintain its dominant position.
As electric vehicle (EV) sales are expected to growth next year, investors are concerned about the potential impact on Li Auto's share price. Analysts at Daiwa Capital Markets believe that the company's sales may be dropping as it transitions to a newer model, which could fuel further concerns about its future growth.
The drop in share prices on Friday is a reflection of losses in the broader market. The Hang Seng Tech Index fell 3.3% while the benchmark Hang Seng Index declined 1.5%. This is a worrisome trend as it indicates that investor confidence is waning. We hope that the market will rebound soon so that investors can recoup their losses.
