Despite the major indices opening higher on Monday to start the week, Chinese stocks are a noticeable outlier. NIO shares in particular are down 21.6% at the time of writing at $8.79. The Hang Seng index dropped more than 6.3%.
On Monday morning in Hong Kong, as observers began to think President Xi Jinping’s move to set himself up as leader for life was a major negative for markets. The Chinese Communist Party Congress concluded with former leader Hu Jintao appearing to be arrested, an unusual instance of party infighting rarely shown publicly.
Possibly even more important, several pro-market reformers were kicked out of the politburo during the Congress. This has sent shockwaves throughout Chinese markets that Xi’s administration will not be friendly to corporates. Chinese GDP data annualized at 3.9% arrived over the weekend, and it was better than the expected 3.5%.
Some observers are refusing to take the reading at face value, however, as they think it may have been pushed higher in time for the party congress.
Nio losed the week on a positive note after volatility. and further Chinese lockdowns sent the stock spiraling to two-year lows. On Friday, shares of Nio gained 2.2% and closed the trading session at a price of $11.21. Stocks rallied on Friday as treasury bond yields retreated and investors shrugged off some mixed earnings reports to carry Wall Street to its best trading week since June.
Overall, the Dow Jones added 2.5%, the S&P 500 gained 2.4%, and the Nasdaq rose by 2.3% during the session.
Not surprisingly, electric vehicle stocks were on the rise on Friday as growth stocks and the Nasdaq index saw a nice bounce. Tesla (TSLA) managed to claw back some of the losses that it sustained following a revenue miss on its recent earnings call. Other EV stocks on the rise included Mullen Automotive (MULN), Rivian (RIVN), Lucid (LCID) and General Motors (GM).