What Caused NIO Stock Price to Drop on Wednesday? The Chinese Stock Crashes Due to Multiple Problems.



China-related stocks like NIO stock and Li Auto (LI) fell on Wednesday for various reasons rather than one specific factor.

The mobilization of China’s “no limits partner,” Russia, has put Beijing in a perilous geopolitical position and is likely one of the most apparent causes impacting bad performance among Chinese ADRs. Even after high-level discussions with Russian defense colleagues, Beijing called for a truce in Ukraine just days later, signaling it may be feeling the pressure from its partner’s protracted conflict. As a result, NIO stock declined.

In China’s situation, worries about irredentism also play a role, especially in light of recent repeated strong words from President Biden over the Taiwan issue.

Air Force Secretary Frank Kendall warned Monday that an invasion would be an “enormous error,” even though Vice President Joe Biden promptly backtracked on his comments about the US military safeguarding the island nation.

I think the Taiwanese people would fight, and we’d help them in some manner,” Kendall said, adding that aggressor nations can’t always expect a quick conflict, as Russia’s actions in Ukraine have shown. Due to this, Chinese-based stock like NIO stock is on a roller coaster ride.

Wednesday saw a decline in several Chinese stocks trading in the United States due to broader geopolitical concerns as Sino-American tensions rose. Nio stock and XPeng (XPEV) were down by double digits, and Li Car (LI) dropped by around 9%, leading to declines in the auto industry. Chinese internet stocks like Alibaba (-4.54%), JD.com (-4.93%), and Tencent (-3.12%), which are included in exchange-traded funds such as the KraneShares CSI China Internet (-4.55%), had their declines more than doubled as a result of the general market decline.

There were other repercussions to think about besides the direct geopolitical worries on Taiwan and Russia. In particular, analysts have highlighted concerns on Chinese markets in light of tightening monetary policy in numerous markets and the lasting effects of lockdowns that are still occasionally enforced in China, among other tangential issues.

Featured Image-  Megapixl @ Andreistanescu

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About the author: I'm a financial journalist with more than 1.5 years of experience. I have worked for different financial companies and covered stocks listed on ASX, NYSE, NASDAQ, etc. I have a degree in marketing from Bahria University Islamabad Campus (BUIC), Pakistan.