ETFs attached to Chinese EV makers power higher
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Exchange traded funds tied to Chinese EV companies pushed higher during Wednesday's intraday trading following a shift in the country's strict COVID-19 policy and amid hope ahead of November sales data for the sector.
KraneShares MSCI China Clean Technology Index ETF (KGRN) and Invesco Golden Dragon China Portfolio ETF (PGJ) were among the big winners during the session. KGRN climbed about 8%, while PGJ was higher by 9% at around 3 p.m. ET.
This came as XPeng (NYSE:XPEV) shares jumped more than 40% on medium term growth prospects despite Q3 earnings miss and a weak Q4 outlook.
Nio (NYSE:NIO) shares were up around 20% and Li Auto (NASDAQ:LI) climbed around 19% as an ease in supply chain issues and a new model boost are expected to contribute to upcoming November sales reports.
NIO is owned by 80 different ETFs, XPEV and LI are owned by 33 ETFs.
KraneShares MSCI China Clean Technology Index ETF (KGRN) has the largest allocation iNIO stock with a weighting of 9.23%. XPEV and LI are densely held by Invesco Golden Dragon China Portfolio ETF (PGJ) with 1.83% weighting and 3.35% weighting respectively.
The rally in the EV sector was part of a broader advance in U.S.-listed Chinese companies. The largest Chinese ETF, iShares MSCI China ETF (MCHI), climbed 4.4% during Wednesday's intraday trading. NIO is one of the top 10 holdings of MCHI, constituting of about 1.64% of the fund.
Cathie Wood's ARK Autonomous Technology & Robotics ETF (ARKQ), the second largest ETF holder of XPEV with 1.07% weighting, was up by ~2%.
Other ETFs with concentrations of NIO, XPEV and LI include Invesco MSCI Sustainable Future ETF (ERTH) and VanEck Vectors Low Carbon Energy ETF (SMOG), which were 3% higher.
As per China Passenger Car Association, retail NEV sales are expected to reach 600,000 in November up 58.5% Y/Y and also up about 8% M/M.
On Tuesday, Chinese based exchange traded funds were higher on hopes of easing Beijing's COVID-zero policy. Meanwhile, Chinese tech stocks such as Alibaba (BABA), JD.com (JD) and Tencent Holdings (OTCPK:TCEHY) are also showing strength.
For more on the EV sector, see why Seeking Alpha contributor John Engle says, "Tesla's China growth prospects look increasingly shaky."