By Yifan Wang
Chinese auto stocks jumped in early trade in Hong Kong amid a growing hope that the sector may have hit bottom and begin to rebound as disruptions related to supply chains and the pandemic begin to ease.
Shares of Great Wall Motor Co. gained as much as 11%, while Geely Automobile Holdings Ltd. rose by up to 8.5%. Electric car makers also soared, with BYD Co. up 6.5%, NIO Inc. surging 8.1% and Li Auto Inc. advancing 6.2%.
The upturn came as equities analysts grew increasingly optimistic over the sector's outlook for recovery. The resurgence of Covid-19 in China badly hurt auto production and sales in the past month.
Officials in Shanghai on Monday said they would begin gradually reopening from stringent lockdowns as of June 1 if progress toward controlling the Omicron outbreak is maintained
"As work resumption continues to progress in Shanghai and surrounding areas, the worst moment is likely over," Capital Securities analysts Yue Qinghui and Chen Yitong wrote in a research note. "Auto demand could substantially pick up as policy stimulus is rolled out and as social and economic activities recover" from China's pandemic-related curbs, they said.
"The auto sector's valuation has significantly corrected down since late 2021, and are now at October 2020 levels," Guosheng Securities analysts said in a note. "This suggests an attractive buying point."
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(END) Dow Jones Newswires