The surge in oil prices has unexpectedly ignited China's electric vehicle sector – BYD's Hong Kong-listed shares surged 8% in March, marking the best monthly performance in over a year. Tensions with Iran have driven up oil prices, prompting consumers in the Philippines and Indonesia to line up for electric vehicles; overseas sales in the first two months of the year soared 50% year-on-year, reshaping the valuation outlook through an export-driven growth narrative.
On March 27, amid the impact of high oil prices, the Hong Kong stock market $Electric Vehicles (LIST22910.HK)$showed active performance, $BYD COMPANY (01211.HK)$ Up nearly 3%, with an accumulated increase of over 11% since March.$LEAPMOTOR (09863.HK)$ with some rising over 3%, $GEELY AUTO (00175.HK)$ 、 $LI AUTO-W (02015.HK)$ rose more than 1%.
The surge in oil prices is reshaping the investment logic for electric vehicles, $BYD COMPANY (01211.HK)$ with Hong Kong stocks posting their best monthly gain in over a year in March, driven primarily by overseas markets as the core driver of valuation improvement.
The crude oil price shock triggered by the Iran war is unexpectedly acting as a catalyst for China's electric vehicle sector. BYD's Hong Kong-listed shares surged 8% in March, making it $NIO-SW (09866.HK)$ 、 $LEAPMOTOR (09863.HK)$ one of $Hang Seng TECH Index (800700.HK)$ the best-performing stocks during the same period. In previous months, the sector had been under sustained pressure due to weak domestic demand and pricing competition.
The strong momentum in overseas markets has been a key support for this rebound. BYD's overseas sales surged 50% year-on-year in the first two months of this year, with noticeable increases in customer traffic at dealerships in Asian markets such as the Philippines and Indonesia. Meanwhile, there has also been a significant influx of orders from Central and South America.
Investors are now focused on the earnings report and full-year guidance due to be released this Friday to assess the sustainability of the export-driven recovery.
Ask Futubull AI:Oil price shock reignites overseas demand
The conflict in Iran has driven up international oil prices, directly stimulating consumer interest in purchasing electric vehicles in emerging Asian markets. According to Bloomberg, consumers in the Philippines and Indonesia have already started queuing up to buy electric vehicles.
Leonid Mironov, portfolio manager at Gavekal Capital Ltd., stated, "In the long term, this will help rebuild the market narrative and consumer perception of electric vehicles, particularly in developed markets."
Rosalie Chen, an analyst at Third Bridge, pointed out, "Overseas expansion has become an inevitable choice for Chinese automakers." She believes that BYD's cost advantage from its self-produced batteries enables it to achieve strong profitability in its export business and "effectively capture the demand shift driven by rising oil prices."
BYD delivered 1.05 million units overseas last year and has set a target to sell 1.3 million units in markets outside of China this year. If its self-developed next-generation fast-charging technology can be implemented in overseas markets, it is expected to further address two key bottlenecks: charging speed and insufficient infrastructure.
Intensified divergence between bulls and bears raises questions about the sustainability of the rebound.
However, the divergence in the market regarding BYD is widening. According to S&P Global data, the proportion of its short positions relative to free float shares has risen from 0.7% at the beginning of the year to 3.2%, indicating a significant increase in short bets. This reflects some investors' doubts about the sustainability of the rally.
Nonetheless, bullish sentiment is also accumulating. Kevin Net, head of Asian equities at Financiere de L'Echiquier, stated that BYD's strong stock performance stems from expectations of a sales recovery this year driven by new model launches, technology debuts, and most importantly, sustained positive momentum in overseas markets.
Ming Lee, an analyst at Bank of America Securities, believes that while BYD's products are gaining recognition abroad, the company also needs to demonstrate its ability to defend its domestic market share. "Foot traffic at stores has rebounded somewhat following the recent technology announcements, but we are still awaiting clearer signals of sustained order recovery."
Currently, BYD's stock price remains more than 30% below its all-time high set in May last year. The earnings release this Friday, along with full-year guidance, will be a critical juncture in determining whether this rebound can evolve into a trend-setting rally.
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