China Stimulus Boosts Stocks of EV Makers and U.S. Steel

China's recent stimulus initiatives have invigorated stock prices for electric vehicle manufacturers XPeng and Li Auto, alongside U.S.-based steelmaker Cleveland-Cliffs. The move aims to bolster economic growth, which could lead to increased demand for EVs and stabilize steel prices globally.

Date: 29-09-2024

AI Rating: 7

The recent report highlights the positive impact of China's new stimulus packages on stock prices, particularly for electric vehicle (EV) makers like XPeng (NYSE: XPEV) and Li Auto (NASDAQ: LI). XPeng's stock surged by 27.4%, while Li Auto rose by 17%, largely driven by the anticipated growth in vehicle sales due to the incentives introduced by the Chinese government.

According to the report, XPeng has delivered over 77,000 EVs year-to-date, marking a 17% increase from the previous year, and newly initiated deliveries of its Mona M03 sedan further support this growth narrative. Similarly, Li Auto has sustained delivery figures above 20,000 vehicles for three consecutive months, highlighting robust demand among young families for its L6 premium SUV.

The report indicates that the overall economic stimulus not only benefits these companies directly but also has ramifications for U.S.-based steelmaking firms such as Cleveland-Cliffs (NYSE: CLF). Cleveland-Cliffs' shares climbed by 10.4%, as improved domestic demand in China is forecasted to decrease exports and subsequently support global steel pricing. This correlation reflects how interlinked the global economy is, especially regarding exports and manufacturing.

Based on the data provided, key metrics that could have an effect on stock prices include:

Revenue Growth: XPeng's vehicle sales growth suggests a positive trajectory in revenue generation.
Net Income: While not explicitly mentioned, the growth in sales typically implies potential improvements in net income for XPeng and Li Auto.
Free Cash Flow (FCF): Inference from the growth trajectory suggests possible health in FCF, although specific figures were not provided.
Return on Equity (ROE): No explicit data was provided on ROE, but growing revenues could signify upward trends in ROE.

Stocks: XPEV LI CLF