China's Energy-Saving Paradise: Electric and Solar Vehicles on the Rise

A pleasing upswing has gripped the Chinese market for electric vehicles and renewable energy this week. Thanks to data from S&P Global Market Intelligence, shares of Li Auto rose by up to 14.9%, while Zeekr Intelligent Technology saw an increase of 30.3%. Daqo New Energy also experienced a noteworthy performance on the trading floors with a 19.8% gain. To the delight of investors, the recent Chinese economic stimulus packages have provided significant tailwinds. Both Li and Zeekr also released their delivery figures for September 2024, which exceeded expectations. Although the upward momentum might wane amid persistently weak Chinese economic growth, stocks are currently soaring. The announcement of the stimulus measures was made a week ago, yet the new details reveal that a massive USD 1.07 trillion—around 6% of China's GDP—is being invested. Investors perceive this as a positive signal for the domestic economy and the demand for vehicles. Meanwhile, Zeekr and Li Auto presented impressive performance records: Zeekr increased its vehicle deliveries in September by 77% year-on-year to 21,333 units, with an overall increase of 71% in 2024. Li Auto impressed with 53,709 deliveries in September, an increase of 48.9% year-on-year. Daqo New Energy, as a supplier of polysilicon for the solar industry, also received an upgrade from HSBC this week—from "Hold" to "Buy," with a target price of USD 29.30 per share, which might already be partially priced in after the recent rise. The central question remains the sustainability of the recent upswing. The challenges of the Chinese economy persist: Domestic demand is still too weak to support the country's industrial base, and trade barriers worldwide are slowing exports. The stimulus measures might temporarily obscure these issues but do not change the fundamental dynamics of the market.