The Chinese government, which has taken aggressive action to curtail the dominance of big domestic tech and Internet names, have not shied away from showing its unflinching support for local EV manufacturers.
What Happened: A recent announcement from the China Securities Regulatory Commission showed that the regulator has expanded the pilot scope of ref chip enterprises to enable them to list in China.
The expanded scope came into effect Friday with the blessings of the State Council, according to a statement from the CSRC.
Red chip shares are the shares of mainland China companies that are listed on the Hong Kong Stock Exchange. These companies are incorporated outside mainland China but conduct their business mainly in China.
The initial pilot program introduced in 2018 allowed internet, big data, cloud computing, artificial intelligence, software and integrated circuits, high-end equipment manufacturing, and biomedical companies to issue shares or depository receipts in China.
With the updated program, high-quality, red-chip companies will now include high-tech technology industries and strategic emerging industries such as new-gen IT, new energy, new materials, new energy vehicles, green environmental protection, aerospace and marine equipment companies.
Why It's Important: The new regulation allows leeway for U.S.-listed Chinese EV startups such as Nio, Inc. NIO, XPeng, Inc. XPEV and Li Auto, Inc. LI to list on China's A-share market.
Among the trio, XPeng and Li Auto have both pursued secondary listings in Hong Kong this year. Nio was also rumored to eye a Hong Kong listing, but its plans have been scuttled due to issues with its user trust holdings. Nio's Hong Kong listing will now be delayed until next year, according to reports.
Additionally, all these EV makers are chasing ambitious expansion plans. Nio has officially entered Norway earlier this year and is on track to launch its ES8 model in the country on Sept. 30. The company is expanding its product lineup by adding a new sedan named ET7 early next year. The company is also reportedly planning to release a budget model vehicle under a different brand name.
XPeng recently launched its third model – a family sedan named P5. The company is also exporting vehicles to Norway.
An additional listing will provide these companies with the wherewithal to expand market opportunities and roll out new models, a definite positive in the near to medium term.
Related Link: How Much Investing $1,000 Each In Tesla, Nio, XPeng, Li Auto One Year Ago Would Be Worth Now
Photo: Courtesy of Unsplash
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
