Nio's stock gets a big boost from China's broad economic stimulus measures

By Tomi Kilgore

Shares of Tesla, which generates about one-fifth of its revenue from China, also rallied as the stimulus offset a drop in insurance registrations

Shares of Nio Inc. were surging in early Tuesday trading, as investors in the China-based electric vehicle maker cheered the stimulus measures China's central back implemented to try to jump start the sagging economy.

While there was some concern that the measures would end up falling short, it helped lift China's stock market to its biggest gain in more than two years.

Nio's stock jumped 6.8% in premarket trading, to put it on track to open at a four-month high. The rally also meant the stock was headed for its best month of the year.

The Invesco Golden Dragon ETF PGJ, which tracks American depositary shares of China-based companies that only list in the U.S., rallied 4.7%.

The People's Bank of China announced the stimulus measures in a rate public briefing. The central bank said it would cut short-term interest rates, reduce that amount of capital banks needed to hold in reserve and provide support for the housing sector and the stock market.

"The big question, whether this signals a decisive shift in Beijing towards a sustained pro-growth stance?" TS Lombard's Rory Green wrote in a note to clients. "We think central leaders are concerned...but still prefer to 'drip feed' support measures into the economy, albeit in larger drips."

Despite the uncertainty, shares of other China-based EV makers, including Tesla Inc., also rallied.

Xpeng Inc.'s stock (XPEV) jumped 7.1% in Tuesday's premarket, Li Auto Inc. shares (LI) rose 8.3% and BYD Co. Ltd.'s U.S.-listed shares (BYDDY) (HK:1211) advanced 3%.

Shares of Texas-based Tesla (TSLA), which generated $4.64 billion, or 18.2% of total second-quarter revenue, from China, rose 1.6% toward a two-month high.

For the week to Sept. 22, the Texas-based EV giant had insurance registrations in China of 13,800, down from 15,600 the week before, as reported by Investor's Business Daily, which with MarketWatch is part of the Dow Jones Network.

At current levels, Tesla registrations during the third quarter are up 20% from the second quarter, and 18% more than the same quarter a year ago, IBD reported.

Tesla's stock has run up 36.9% over the past three months, while Nio shares have hiked up 19.8% and the Golden Dragon ETF has slipped 1.1%.

-Tomi Kilgore

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09-24-24 0932ET

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