Nio, Alibaba, Bilibili among Chinese stocks brace for another rally as Covid checks ease

U.S.-listed Chinese internet and electric vehicle stocks rebounded strongly in pre-market trade on Monday amid reports that authorities in the country are easing pandemic restrictions.

China is relaxing some of the toughest anti-virus controls in the world, and authorities say newer variants are weaker. On Monday, commuters in Beijing and at least 16 other cities were allowed to board buses and subways without testing for the virus in the previous 48 hours for the first time in months. Industrial hubs, including Guangzhou near Hong Kong, have reopened markets and businesses and lifted most movement restrictions, while maintaining restrictions on infected neighborhoods.

See: China begins to ease restrictions in Beijing and elsewhere

Hopes that the country’s economy was reopening helped send U.S.-listed shares of Alibaba Group Holding Ltd., BABA,
+4.79%
to their biggest monthly gain in seven years in November, while the Golden Dragon China ETF PGJ,
+5.20%
experienced its strongest monthly increase since September 2007.

Among the big winners in Monday’s premarket are US-listed shares of Bilibili Inc. CAR,
+16.57%,
up 16.8%, iQiyi Inc. reported. QI,
+14.78%,
up 8.7% Huya,
+9.74%,
an increase of 6.1%, and Baidu Inc. BIDU,
+4.72%,
an increase of 4.9 per cent. US depository for shares in Alibaba and JD.com Inc. JD,
+5.00%
are each up 4.8 per cent.

US-listed shares of Chinese electric car companies joined Monday’s strong premarket rally with Nio Inc. NINE,
+8.60%
up 8.0%, XPeng Inc. XPEV,
+14.84%
an increase of 14.9%, and Li Auto Inc. LI,
+6.95%
an increase of 5.6 per cent.

An easing of China’s COVID-19 regulations could also benefit American companies. Apple Inc. for its part, has warned that production disruptions in China could affect iPhone 14 Pro shipments in the current quarter, and analysts are wondering how this dynamic will play out in the critical season, holiday sales and next year.

Read: Foxconn COVID-hit factory back to full production in late December or early January, report says

The Wall Street Journal reported over the weekend that Apple “has accelerated plans” to move some of its production out of China, to India and Vietnam.

“Leaving China will not be easy and [will] comes with clear logistical, engineering and infrastructure hurdles,” Wedbush analyst Daniel Ives wrote in a note to clients on Sunday.

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