JPM Projects Tepid Beginning for China's Auto Sales in Q1, Passenger Vehicle Demand Expected to Stay Low
Stock Performance of Chinese OEMs: Chinese OEMs have seen a 1% decline in stock performance year-to-date, contrasting with a 6% increase in the MSCI China Index, primarily due to weak auto sales in the first quarter of 2026.
Impact of Government Policies: Despite updates to the automotive trade subsidy policy, passenger car demand remains pressured by factors like weak consumer confidence and a cautious buyer attitude, as noted by JPMorgan.
Shift in Competitive Landscape: The competitive environment in China's automotive industry is expected to transition from price wars to value creation, favoring companies that excel in autonomous driving, AI, cost control, and international expansion.
Investment Recommendations: JPMorgan forecasts a potential bottoming out for certain OEMs in Q2 2026 and suggests investors consider XPENG and NIO for potential gains, while remaining cautious about LI AUTO.
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<Research>CLSA: Rising Costs Squeeze Automaker Profits; BYD and Leapmotor More Resilient to Pressure
Impact of Commodity Prices: Rising commodity prices are creating challenges for automakers, potentially leading to industry consolidation and adjustments in pricing strategies, as highlighted by CLSA's research report.
Cost Increases: Raw material costs are expected to raise the average cost per vehicle by approximately RMB3,000, driven by increases in lithium carbonate, memory chips, and non-ferrous metals.
Vertical Integration Advantage: Automakers with higher vertical integration, like BYD, or those with significant external auto part sales, such as LEAPMOTOR, are better positioned to manage the cost pressures from rising raw material prices.
EV Market Dynamics: Geely Auto is emerging as a strong competitor in the electric vehicle sector, while the Chinese automotive industry is undergoing consolidation, with market share increasingly concentrated among tier 1 OEMs.
Citi Anticipates Higher Commodity Prices Will Favor Basic Materials While Straining Auto and Mid-Tier Battery Firms
Commodity Price Impact: Commodity prices have risen significantly, benefiting the basic materials sector in China, particularly suppliers of aluminum, copper, and lithium, with positive ratings for companies like CHALCO and MMG.
Automakers Under Pressure: Rising material costs are expected to increase the production costs for mass-market electric vehicles, with smaller automakers like XPENG and GAC GROUP being more vulnerable compared to larger firms like BYD and Geely.
Battery Industry Outlook: Short-term challenges are anticipated for second-tier battery companies, while CATL is expected to maintain a strong position due to its bargaining power and upcoming production resumption.
Tech Sector Challenges: Xiaomi may face margin pressures from increasing memory costs, which significantly impact the bill of materials for its smartphones, potentially affecting profitability.
HSI Drops 304 Points at Midday; AIA Plummets Nearly 5% Amid Weak Financials
Market Performance: The HSI fell 304 points (1.1%) to 26,580, with the HSCEI and HSTECH also experiencing declines, while total market turnover reached HKD139.462 billion.
Financial Stocks Decline: Major financial stocks like HSBC, AIA, and Standard Chartered saw significant drops, with short selling ratios indicating increased market pressure.
Tech Stocks Movement: Tech stocks such as Meituan, Tencent, and Alibaba faced losses, while some companies like Bilibili and Kuaishou also reported declines in their stock prices.
Carmakers Rally: In contrast to the overall market, car manufacturers like Geely, BYD, and NIO experienced gains, with notable increases in their stock prices amidst the downturn.
HSI Declines by 530 Points or 2%; Commodities Under Pressure; AIA and BIDU-SW Drop 4%
Market Overview: The HSI opened 530 points lower at 26,354, with significant declines in the HSCEI and HSTECH, reflecting a broader downturn in the market.
Commodity Stocks Performance: Gold and silver stocks, including CHINAGOLDINTL and SD GOLD, started low amid commodity market fluctuations, with notable short selling activity.
Tech Sector Decline: Major tech stocks like Meituan-W, Tencent, and Alibaba experienced declines, with Meituan-W also announcing an acquisition of a grocery e-commerce company.
Financial Sector Impact: Financial stocks such as HSBC and AIA opened lower, reflecting a negative trend in the sector, alongside a general decline in the Hong Kong stock market.
Zeekr 9X Exceeds 30,000 Deliveries as Production of Key Components Increases
Zeekr 9X Deliveries: Zeekr has announced that total deliveries of the Zeekr 9X have exceeded 30,000 units, driven by increasing customer enthusiasm since its launch.
Production Progress: The company has made significant progress in ramping up production for certain components, thanks to collaboration with supply chain partners.
Market Context: CLSA has predicted that overall auto sales in China will remain sluggish in February, indicating a weak performance for the industry in the first quarter.
Short Selling Data: As of February 4, 2026, short selling for GEELY AUTO stands at $101.29 million, with a ratio of 20.625%.
GEELY AUTO Acquires 67.43 Million Shares
Share Repurchase Announcement: GEELY AUTO announced a plan to repurchase shares worth up to HKD2.3 billion, having already repurchased 67.431 million shares under this initiative.
Share Cancellation: The repurchased shares will be canceled as soon as practicable following the buyback plan.
<Research>CLSA: Rising Costs Squeeze Automaker Profits; BYD and Leapmotor More Resilient to Pressure
Impact of Commodity Prices: Rising commodity prices are creating challenges for automakers, potentially leading to industry consolidation and adjustments in pricing strategies, as highlighted by CLSA's research report.
Cost Increases: Raw material costs are expected to raise the average cost per vehicle by approximately RMB3,000, driven by increases in lithium carbonate, memory chips, and non-ferrous metals.
Vertical Integration Advantage: Automakers with higher vertical integration, like BYD, or those with significant external auto part sales, such as LEAPMOTOR, are better positioned to manage the cost pressures from rising raw material prices.
EV Market Dynamics: Geely Auto is emerging as a strong competitor in the electric vehicle sector, while the Chinese automotive industry is undergoing consolidation, with market share increasingly concentrated among tier 1 OEMs.
Citi Anticipates Higher Commodity Prices Will Favor Basic Materials While Straining Auto and Mid-Tier Battery Firms
Commodity Price Impact: Commodity prices have risen significantly, benefiting the basic materials sector in China, particularly suppliers of aluminum, copper, and lithium, with positive ratings for companies like CHALCO and MMG.
Automakers Under Pressure: Rising material costs are expected to increase the production costs for mass-market electric vehicles, with smaller automakers like XPENG and GAC GROUP being more vulnerable compared to larger firms like BYD and Geely.
Battery Industry Outlook: Short-term challenges are anticipated for second-tier battery companies, while CATL is expected to maintain a strong position due to its bargaining power and upcoming production resumption.
Tech Sector Challenges: Xiaomi may face margin pressures from increasing memory costs, which significantly impact the bill of materials for its smartphones, potentially affecting profitability.
HSI Drops 304 Points at Midday; AIA Plummets Nearly 5% Amid Weak Financials
Market Performance: The HSI fell 304 points (1.1%) to 26,580, with the HSCEI and HSTECH also experiencing declines, while total market turnover reached HKD139.462 billion.
Financial Stocks Decline: Major financial stocks like HSBC, AIA, and Standard Chartered saw significant drops, with short selling ratios indicating increased market pressure.
Tech Stocks Movement: Tech stocks such as Meituan, Tencent, and Alibaba faced losses, while some companies like Bilibili and Kuaishou also reported declines in their stock prices.
Carmakers Rally: In contrast to the overall market, car manufacturers like Geely, BYD, and NIO experienced gains, with notable increases in their stock prices amidst the downturn.
HSI Declines by 530 Points or 2%; Commodities Under Pressure; AIA and BIDU-SW Drop 4%
Market Overview: The HSI opened 530 points lower at 26,354, with significant declines in the HSCEI and HSTECH, reflecting a broader downturn in the market.
Commodity Stocks Performance: Gold and silver stocks, including CHINAGOLDINTL and SD GOLD, started low amid commodity market fluctuations, with notable short selling activity.
Tech Sector Decline: Major tech stocks like Meituan-W, Tencent, and Alibaba experienced declines, with Meituan-W also announcing an acquisition of a grocery e-commerce company.
Financial Sector Impact: Financial stocks such as HSBC and AIA opened lower, reflecting a negative trend in the sector, alongside a general decline in the Hong Kong stock market.
Zeekr 9X Exceeds 30,000 Deliveries as Production of Key Components Increases
Zeekr 9X Deliveries: Zeekr has announced that total deliveries of the Zeekr 9X have exceeded 30,000 units, driven by increasing customer enthusiasm since its launch.
Production Progress: The company has made significant progress in ramping up production for certain components, thanks to collaboration with supply chain partners.
Market Context: CLSA has predicted that overall auto sales in China will remain sluggish in February, indicating a weak performance for the industry in the first quarter.
Short Selling Data: As of February 4, 2026, short selling for GEELY AUTO stands at $101.29 million, with a ratio of 20.625%.
GEELY AUTO Acquires 67.43 Million Shares
Share Repurchase Announcement: GEELY AUTO announced a plan to repurchase shares worth up to HKD2.3 billion, having already repurchased 67.431 million shares under this initiative.
Share Cancellation: The repurchased shares will be canceled as soon as practicable following the buyback plan.
