Nio, Alibaba shares fall on weak China data and improved odds of a Trump win

By Tomi Kilgore

Nio's stock is suffering its biggest selloff in nearly six weeks, and shares of other EV makers also drop

The U.S.-listed shares of China-based companies took a broad hit Monday after data showed that China's economy grew at a weaker rate than expected in the second quarter.

Increasing odds of a win by Donald Trump in November in the wake of the failed assassination attempt on the former president and as the Republican National Convention kicks off may also be weighing on the shares. Many expect that a Trump administration would impose additional tariffs on imports from China.

The iShares MSCI China exchange-traded fund MCHI fell 1.7% in morning trading. The Invesco Golden Dragon China ETF PGJ, which tracks U.S.-exchange-listed companies based in China, slid 2.9%, with 56 of 65 equity components trading lower.

Data over the weekend showed that China's economy grew at an annual rate of 4.7% in the second quarter, down from a 5.3% growth rate in the first quarter, with China's government saying domestic demand was insufficient and as businesses were under great operating pressure, as the Associated Press reported.

Elsewhere, the failed assassination attempt on Trump over the weekend appeared to increase the probability of him returning to the White House. While that helped fuel rallies in a number of stocks, as well as in bitcoin, it wasn't helping the American depositary shares of China-based companies.

Among the more active American depositary shares of China-based companies, shares of electric-vehicle maker Nio Inc. (NIO) sank 6.2%, the biggest selloff in nearly six weeks.

The ADSs of other China-based EV makers also fell, with Xpeng Inc. shares (XPEV) down 5.5%, Li Auto Inc.'s stock (LI) falling 4.6% and BYD Co.'s stock (BYDDY) (CN:002594) shedding 1.3%.

The Biden administration has also not been favorable to China imports, quadrupling tariffs on EVs from China to 100% in May. But Trump was known for escalating the trade war with China, so it's being assumed that tensions would increase further if Trump returns to the White House.

Shares of e-commerce giant Alibaba Group Holding Ltd. (BABA) lost 1.5%, to put it on track for its first loss in five sessions.

Alibaba is projected to report fiscal first-quarter results at the end of July. Analysts have grown less optimistic about the company's sales, with a current FactSet consensus for year-over-year growth of about 6%, compared with expectations as of the end of March for about 6.5%.

Elsewhere, shares of online marketing-services provider Baidu Inc. (BIDU) shed 5.8%, e-commerce company JD.com Inc.'s stock (JD) slumped 4% and online entertainment-services company iQiyi Inc. shares (IQ) dropped 4.9%.

The PGJ ETF has declined 10.9% year to date, while the S&P 500 index SPX has advanced 18.3%.

-Tomi Kilgore

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07-15-24 1041ET

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