Morgan Stanley Explains the Reasons for Today’s Rise in BYD Stock Price

Investing.com - BYD’s stock price rose 7.4% on Monday, with Morgan Stanley pointing out several factors driving the rally, including the recovery of the Chinese auto sector and company-specific overseas developments.

Morgan Stanley said the rally reflects market expectations that sales of Chinese automakers will recover from the end of the first quarter or early second quarter, thanks to improved capital flows, stabilized fundamentals, and a series of new vehicle launch plans, which could drive broader gains across the auto sector.

The firm noted that after the conclusion of the National People’s Congress last week, tech stocks listed in Hong Kong performed well on Monday, as the government emphasized prioritizing technology and innovation.

BYD Executive Vice President Stella Li announced over the weekend that the company’s factory in Brazil has a capacity of 150,000 units, with orders of 100,000 units from Mexico and Argentina, each country receiving 50,000 units. Sales of models including the Dolphin Mini and Song Pro have increased in these markets over the past few months.

Morgan Stanley estimates that Brazil and Mexico together account for about 25% of BYD’s overseas sales by 2025. Li also stated on Friday that BYD is open to building a factory or acquiring assets in Canada, after tariffs on Chinese electric vehicles were reduced earlier this year.

Morgan Stanley said the stock price movement may partly be influenced by short covering, as some investors in Hong Kong and China previously used BYD as a hedging tool against other auto sector positions following a super-fast charging event held by BYD earlier this month.

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