HK NEV Sector Surges: Policy Boost and Demand Recovery Lift BYD to Record High
On July 28, 2026, the NEV sector in the Hong Kong stock market surged broadly, becoming the day's biggest highlight. BYD Co., Ltd. (01211.HK) closed up 6.8% at HKD 326, hitting an intraday high of HKD 330, a record since listing; XPeng (09868.HK) rose 7.2%, Li Auto (02015.HK) gained 5.8%, and NIO (09866.HK) rose 4.9%. Turnover for many stocks in the sector more than doubled from the previous day, with clear capital inflows.
Multiple Catalysts Align
The strong performance of the NEV sector today was mainly driven by the following factors:
- Policy Reinforcement: According to Xinhua News Agency, ten departments including the NDRC, MIIT, and MOFCOM jointly issued the "Several Measures to Further Promote NEV Go-to-Rural Campaign", proposing a new round of NEV go-to-rural activities in 50 cities nationwide in H2 2026, offering subsidies of up to RMB 15,000 per vehicle for rural residents purchasing NEV passenger cars, and encouraging local governments to support charging pile construction. This is seen as another strong stimulus following the 2024 and 2025 campaigns, expected to directly boost NEV sales in lower-tier cities and rural areas by over 30%.
- Sector Data Exceeds Expectations: Tesla (TSLA.US) reported Q2 2026 earnings after US market close on July 27, with quarterly deliveries of 466,000 vehicles, up 22% YoY, beating the market expectation of 448,000. The company reaffirmed its full-year delivery target of 1.8 million vehicles, indicating continued strong global demand. Tesla's stellar performance boosted confidence in the entire EV industry.
- Cost Decline in Supply Chain: Lithium carbonate prices have recently fallen to RMB 78,000 per ton, down 15% from the start of the year. The chip shortage has largely eased, and prices of battery-grade copper foil, electrolyte, etc., have also declined. Reduced cost pressure directly improved gross margin expectations for automakers, especially for loss-making new EV startups, providing a window for profit recovery.
Capital Inflows Continue, Southbound Funds Increase Positions
On the capital front, southbound net buying via Stock Connect totaled HKD 4.52 billion today, with NEV sector accounting for over 40% of net inflows. BYD attracted HKD 870 million in net buying via Shanghai-HK Stock Connect, topping the net buying list; XPeng and Li Auto also saw net buying of HKD 230 million and HKD 180 million respectively. Analysts believe that against the backdrop of global energy transition, HK-listed NEV stocks are attractively valued. BYD's current PE (TTM) is only 22x, far below comparable A-share stocks, and southbound funds remain enthusiastic.
In addition, the latest HKEX data shows that since July, foreign investors have maintained net selling of A-share NEV stocks via Shanghai/Shenzhen-HK Stock Connect, but have continuously net bought HK-listed NEV stocks via southbound Stock Connect, showing a "sell A, buy H" trend. Nomura's latest research note points out that HK-listed NEV companies trade at a significant discount to their A-share counterparts and offer better liquidity, recommending investors focus on leading stocks like BYD and XPeng.
Sector Outlook
Looking ahead to H2, most institutions are optimistic. CLSA released a report stating that with the implementation of the auto-rural policy, increased local subsidies, and the launch of several blockbuster new models (such as BYD's high-end brand Yangwang U8 and XPeng X9), China's NEV sales in 2026 are expected to exceed 15 million units, up over 35% YoY. Among them, HK-listed automakers are expected to benefit from industry concentration. BYD, with its technological advantages, is expected to capture over 30% market share, while XPeng and Li Auto, with cost improvements and scale ramp-up, are expected to achieve quarterly profit turning positive in 2026.
However, some analysts have also flagged risks. UBS pointed out that the average P/B ratio of HK-listed NEV stocks has rebounded to 2.5x, near the historical median above, indicating some wait-and-see sentiment in the near term. Additionally, the specter of US and EU tariffs on Chinese EVs remains, and overseas expansion may face uncertainties. Investors should be cautious of pullback risks after short-term overheating.
Stock Performance
- BYD Co., Ltd. (01211.HK): Closed at HKD 326, up 6.8%, turnover rate 1.2%. The company announced today that orders for its high-end brand Yangwang U8 luxury edition have exceeded 30,000 units, with deliveries expected to begin in Q3. In addition, its blade battery has been confirmed to supply Tesla's Berlin factory, likely boosting profits further.
- XPeng (09868.HK): Rose 7.2% to HKD 72.5. XPeng announced that pre-sales of its X9 model exceeded 15,000 units in the first 24 hours, and deepened cooperation with NVIDIA, with next-gen models to feature DRIVE Thor chips.
- Li Auto (02015.HK): Rose 5.8% to HKD 158. The company's L9 model continued to sell well in the mid-to-large SUV market, with June deliveries exceeding 20,000 units, a monthly record.
- NIO (09866.HK): Rose 4.9% to HKD 86.3. NIO announced a partnership with CATL to develop high-voltage fast-charging battery packs, enabling 400 km range with a 10-minute charge in future models.
Overall, driven by both policy and demand, the HK NEV sector showed strong resilience. At the close, the Hang Seng Index edged up 0.3% to 28,950 points, but the sector's profit effect was significant. Going forward, close attention should be paid to policy implementation effects and automaker delivery data to capture structural opportunities.
