What happened
Shares of Chinese electric vehicle maker (EV) Nio (NIO -1.81%) fell today after President Biden unveiled the Indo-Pacific Economic Framework (IPEF) yesterday. The decline comes just one day after Nio shares fell 5%.
IPEF could be a way for the United States to oppose China’s economic dominance in the Indo-Pacific region, and Chinese stock investors are concerned that this could lead to more divisions between the United States and China. As a result, shares of Nio fell 7.8% at 13:14
And what
Chinese stock investors have been on the brink for months as US regulators have threatened to delist some Chinese stocks listed on US stock exchanges if they fail to meet specific audit requirements set by the Securities and Exchange Commission (SEC).
Image source: Nio.
These fears and economic tensions between the United States and China have wreaked havoc on many Chinese stocks over the past few months.
Now that Biden is trying to strengthen its economic position in the Indo-Pacific region, Chinese equity investors appear to be worried that the move could further damage relations between the two countries.
IPEF will help establish international rules between Australia, Japan and South Korea on things like supply chains, regulations for workers and the digital economy, according to a press release.
Now what
Investors at Nio are clearly worried that Chinese stocks will continue to have a hard time as the United States and China try to position themselves as the dominant economic power.
This struggle comes at a time when Chinese stocks are already struggling due to China’s strict zero-COVID policy, which has led some of Nio’s vehicle plants – and many others – to close recently.
Investors in Nio probably need to prepare for greater stock volatility, as the wider EV market struggles amid high inflation and rising production costs, and as economic tensions between the US and China have a significant impact on the price of Nio shares.
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