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Bartis HK - Investors are concerned that this company's expansion may come to a halt
NIO Inc. (NIO) fell today, falling as low as 7.2% as of 12:47 p.m. ET. With today's drop, the electric vehicle (EV) stock extended its previous day's sharp losses and was down 15.8% for the week and 45% for the month as of this writing.
According to The Fly, Barclays PLC (BCS) analyst Jiong Shao has reduced NIO stock's price estimate to $19 per share. This is a remarkable reversal, since the analyst had given NIO stock a price target of $34 per share earlier this year, citing optimism about China's EV industry. It turns out that China is too responsible for NIO stock's cut for the price target.
Chinese markets fell on Friday, with the HANG SENG INDEX (^HSI) in Hong Kong falling to levels not seen since 2009. Since President Xi Jinping was elected for a third term earlier this week, investors have sold Chinese equities, fearing that the country will double down on its zero-COVID policy under Xi, causing the economy to stall.
Although Xi hasn't mentioned anything new about his zero-COVID policy, most observers believe the country's COVID-19 regulations would be tightened even further. Indeed, rumours this week of major cities in China putting additional regions under lockdown have fuelled investor's concerns. According to CNBC, Nomura analysts estimated that the latest wave of lockdowns and restrictions has harmed up to 9.2% of China's GDP as of Thursday.
Because Xi is also known for cracking down on the private sector, particularly technological firms, his confirmation of a third term prompted a stock market crash in China this week. The repercussions were felt on shares of Chinese firms listed in the United States, notably NIO.
Investors in NIO are particularly concerned about lockdowns extending to China's industrial districts, which might harm the EV producer just as it is expanding. Most automakers in the country saw severe drops in vehicle sales earlier this year after being forced to cease operations for several weeks due to lockdowns.
It's not an easy moment to be a Chinese stock investor. The country is already dealing with a housing crisis, and Xi's extension of his rule has reignited concerns about a recession, prompting some experts to lower their medium-term growth projections for China.
At Bartis Investment Limited (https://bartis-
Bartis Investment Limited
Page Updated Last on: Jul 02, 2023