Across the board, stocks are ripping higher. Notably, high-growth, tech and electric vehicle (EV) stocks are enjoying strong gains over the last few days. For the first time in ages, that also includes Chinese EV stocks.
Li Auto (NASDAQ:LI) was up 7.6% on Thursday and is up 6.7% on Friday. However, the stock was up by a double-digit percentage both days before fading a bit off the highs.
For its part, Tesla (NASDAQ:TSLA) isn’t doing much to help. Shares are up about 3% on the day and the stock is struggling to clear the high from Wednesday. Still, that’s not slowing down the rally in Chinese EV stocks.
What’s Driving Chinese EV Stocks Higher?
It’s been an interesting two days in the stock market, as U.S. equities have stormed higher. However, there are several factors that are helping drive Chinese EV stocks higher.
First, growth, tech and EV stocks have exploded higher over the last two days following the monthly inflation report. Inflation came in lower than expected on Thursday morning, igniting a rally on Wall Street. That has investors positioning for a potential bullish rally in the most beaten down parts of the markets.
Second, Chinese equities have performed quite well. The iShares China Large-Cap ETF (NYSEARCA:FXI) is up 22% from the low two weeks ago and has rallied in seven of the last nine trading sessions (with one of the “declines” coming in at just 0.08%.) As we’ve discussed before, the performance of Chinese equities can have a large impact on Chinese EV stocks.
Lastly, China is reportedly preparing to reopen soon. That includes shortened quarantine periods and easing up on other Covid-related protocols. As many investors know, these eased restrictions can open up the economy and allow for further growth. If that’s the case, it could be a big win for Chinese EV stocks.
That’s especially true if kickstarts a rally in Chinese equities.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.