Chinese EV stocks on a rollercoaster ride, thanks to rising oil prices and inflation

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The wild ride experienced by Chinese electric vehicle (EV) makers last week perfectly encapsulates the soaring highs and shattering lows of volatile stock markets.

Amid Russia’s invasion of Ukraine, oil prices are at its highest since July 2008. This has hastened efforts to transition from fossil fuels to more sustainable energy sources and, therefore, creating a more optimistic market sentiment in the EV space.

Additionally, China’s passenger vehicle sales rose 4.7% in February, helped by a staggering 180% growth in deliveries of new-energy vehicles.

Investors of China’s EV firms cheered when the US imposed a ban on Russian oil imports. These sanctions will likely push oil prices further up, which saw shares of EV makers Nio Inc (NIO, NYSE), Xpeng Inc (XPEV, NYSE), and Li Auto (LI, NDAQ) rise between 10% and 14% on Wednesday.

However, just a day later, the rally was abruptly cut short after inflationary pressures rose. The US posted a 7.9% year-on-year increase in consumer prices for February – the sharpest annual spike in four decades.

With prices of key EV-related metals, such as nickel, surging and consumer sentiment dampening under heightened inflation, shares of Nio, Xpeng, and Li Auto reversed course. They ended the topsy-turvy week down roughly 14%, 22%, and 19%, respectively.

Image credit: Timmy Loen

Staying with China’s battered and beleaguered tech giants, JD.com (JD, NDAQ) came in for no respite after posting a massive quarterly loss and its weakest revenue growth in six quarters. The ecommerce firm’s shares fell about 16% following the disappointing earnings report.

JD.com’s rival, Alibaba (BABA, NYSE), also reported uninspiring quarterly earnings last month as it posted its slowest quarterly revenue growth since going public in 2014.

In dire need to boost revenues amid rising challenges in its home turf, Alibaba could potentially unlock vast amounts of value by accelerating its ecommerce ambitions in Southeast Asia through a public listing of its subsidiary, Lazada, as my colleague Huong reports in this premium story.

Despite all the clamor around China shaving trillions of value off its big tech firms through regulatory crackdowns, companies such as JD.com, Alibaba, and Tencent (0700, HKG) remain behemoths of the tech world.

Their sheer size comes to the fore in this premium story that explores the differences between India’s and China’s tech titans and the underlying factors behind the gap between the countries’ respective tech ecosystems.

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