Nio Inc (NIO)

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Nio Stock Is Jumping. It’s Not Just About a New Car
By: Barron's | June 14, 2022

Nio stock was soaring after the Chinese electric-vehicle maker announced a new car. The big move, however, may have more to do with hopes for the Chinese economy than any individual car.

Nio stock has gained 19% to $18.97 at 1:28 p.m. on Tuesday ahead of a launch event on Wednesday. The company is expected to reveal its much-anticipated ES7 SUV—it teased a video of something—and the hope is that it will help drive new sales through 2022.

But Nio is also benefiting from what looks to be a reassessment of Chinese stocks by investors. While the S&P 500 has fallen 0.3% and the Dow Jones Industrial Average is off 0.5%, the iShares MSCI China ETF (MCHI) has gained 3.1%. That’s helped boost not only Nio, but Li Auto, which is up 12%, XPeng (XPEV), which has risen 7.8%, and Alibaba Group Holdings (BABA), which is up 6.7%.

What’s brought Chinese stocks, which have gotten pummeled, back into favor, at least for one day. After another series of near-total Covid-19 lockdowns, the economy has started to reopen, while policy makers are starting to take steps to ease monetary conditions at a time when the U.S. Federal Reserve is set to raise interest rates by the most since the 1990s.

Money has to go somewhere, and as investors start to fear what’s to come in the U.S., they’re looking to China as a potentially safer haven for their cash.

And that’s a scary thought in and of itself.

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