The Chinese government strikes the U.S. stock market again. Though today’s news of a regulatory crackdown focuses on education companies in China, many U.S.-listed Chinese stocks are being hit this morning. Electric vehicle maker Nio (NYSE:NIO) is among them, with its stock down almost 6% as of 11:40 a.m. EDT.
The Chinese government has added restrictions to the private education industry, including bans on raising money through stock listings and foreign investment, reports CNBC. So why does that affect an electric car maker like Nio? Technically it doesn’t — at least not yet.
Fear of the unknown as it relates to China’s heavy-handed government is what worries U.S. investors. In addition, Nio relies on a partnership with a state-owned manufacturer to produce its vehicles. But other company-specific news should have investors feeling good about the company today.
Nio previously announced it would be selling its vehicles outside of China for the first time by entering the European market initially in Norway. Yesterday, the company announced that its first shipment of its flagship ES8 electric SUVs destined for Norway left Shanghai on July 20.
The vehicles are set to begin delivery to customers in Norway in September. Nio said it has received European Community Whole Vehicle Type Approval (ECWVTA), but presumably the company is still getting its Norway operations up to speed.
There is always risk with foreign stocks, and particular uncertainty with the Chinese government. But if investors are comfortable with that risk, today’s drop may be an opportunity as Nio‘s business continues to grow and expand.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Fintech Zoom premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.