Foreign capital drives into Chinese EV stocks
Published: Aug 16, 2021 07:33 PM
A NEV is charging. Photo: VCG

A NEV is charging. Photo: VCG

While foreign investment funds were mixed in terms of investing in Chinese internet stocks in the second quarter, they raised holdings of China's new-energy vehicle (NEV) makers, underscoring their confidence in the country's fast-growing NEV market.

UK-based Baillie Gifford & Co held 14.83 million shares of Chinese NEV innovator Li Auto Inc as of June 30, an increase of about 62 percent compared with the previous quarter, according to the company's latest earnings report.

US-based Fidelity Investments increased its stake in Xpeng Motors by 3.78 million shares to 13.35 million by the end of the second quarter, while UBS purchased 261,000 units of these shares over the same period.

Goldman Sachs also slightly increased its holding of NIO to 21.44 million shares.

These moves reflect funds' confidence in the fast growth pace and huge potential of China's NEV sector, especially as the central government pushes ahead efforts to tap the domestic market's potential and support faster development of the NEV sector, Cui Dongshu, secretary general of the China Passenger Car Association (CPCA), told the Global Times on Monday.

Despite pressure from a global chip shortage, sales of NEVs in China surged 210 percent in the first seven months of the year to 1.23 million, according to data from the CPCA.

Cui projected that Chinese NEV makers' global sales will reach 3 million units this year, which would be an increase of more than 200 percent year-on-year. 

"Accelerating the development of the NEV sector will spark new growth momentum to facilitate the upgrading of the country's manufacturing industry chain, while optimizing the energy structure to reduce reliance on crude oil imports," he said.

International asset managers took a different approach toward Chinese internet firms amid the country's intensifying crackdown on monopolistic practices and disorderly development in the sector.

During the second quarter, one of the world's largest asset managers BlackRock slashed 88.3 percent of all the stake it holds in Alibaba, involving around 74 million shares. However, Goldman Sachs added 5.87 million Alibaba shares as of June 30, up 23.86 percent quarter-on-quarter.

Like the NEV sector, China's internet industry also has great potential, and some investors wrongly think that development in the industry might be dragged down by recent regulatory actions, Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies at Renmin University of China, told the Global Times on Monday.

"The central government has always stuck to its pledge to let the markets play a decisive role in allocating resources. In this regard, administrative measures only act as 'patches' to adjust imbalanced development," Dong said, noting that foreign capital should focus more on market demand in relevant industries to make investment decisions.

He added that the country's need for internet services will persist and given the huge market size, the growth potential of domestic internet firms like Alibaba and Tencent is still promising - if they rectify their problematic in line with regulations.

Global Times