Chinese carmakers get V-sign from analysts as tax cuts seen reviving share prices, sales from April slump
- An index tracking Chinese autonomous and electric vehicles has surged 30 per cent from an April low as lockdowns fade, tax stimulus kicks in
- Money managers including DWS and BNP Paribas have added Xpeng, Nio shares in recent filings compiled by Bloomberg
Chinese carmakers are enjoying renewed support from analysts at JPMorgan Chase and Jefferies, who see a sales rebound in May and state subsidies as catalysts to sustain a 30 per cent surge in stock prices over the past two months.
The Ministry of Finance and the State Taxation Administration announced on May 31 a 50 per cent cut in purchase tax on low-emission passenger vehicles from June 1 till year-end. The Shanghai government separately offered a subsidy for electric-car purchases as part of its 50-point plan to repair the local economy after two months of lockdown.
02:52
Luxury shopping centres open new battleground for China’s electric car makers
“We expect a V-shaped rebound in auto demand [into the second half] after lockdowns in selected cities including Shanghai are gradually lifted,” JP Morgan analysts including Nick Lai wrote in a note published on Wednesday. “Tax cuts helped boost auto demand and sector performance in the past.”
Chinese makers of autonomous and new-energy vehicles have regained 1.8 trillion yuan (US$270 billion) of market value since rebounding from a 19-month low in April, according to MSCI China All Shares IMI Future Mobility Top 50 Index. BYD and Li Auto jumped by 27 to 37 per cent in that rally. The index had earlier slumped 47 per cent in the preceding five months.
