Investors are Shorting These 5 Chinese Stocks

4. NIO Inc. (NYSE:NIO)

Float Shorted: 3.59%

Number of Hedge Fund Holders: 26

NIO Inc. (NYSE:NIO) is a Shanghai-based automobile manufacturer with a heavy emphasis on electric vehicles. Overall, 26 funds held a stake in NIO Inc. (NYSE:NIO) as of Q1 2022.

NIO Inc. (NYSE:NIO) observed a 22.4% month-over-month decline in production despite the Chinese economy opening up after the COVID-19 lockdowns. The decline in production on a sequential basis was due to supply chain-related problems for the company’s ET7. The delivery delay for the ET7 could be crucial for NIO Inc. (NYSE:NIO), as the EV maker has not been able to ramp up its production because of this variant. The company anticipates solving this problem during the third quarter. However, investors are seeing this as an opportunity to short NIO Inc. (NYSE:NIO), as a further decline in production could cause the stock price to plummet.

Here’s what Horos Asset Management said about NIO Inc. (NYSE:NIO) in its Q1 2022 investor letter:

“At the beginning of April the CSRC (China Securities Regulatory Commission) announced possible changes in its regulation that would allow this inspection by foreign auditors, provided that the companies previously communicate to this body the state secrets that would be exposed, as well as the sensitive information that they might have to hand over, and the subsequent audit is carried out in a framework of collaboration with the CSRC. In short, a move in the direction desired by the SEC, although still far from the optimal result, that is, unrestricted access to information. While these negotiations between the two regulatory bodies are progressing, Chinese companies have to decide how best to preserve their interests. Other entities, such as the electric vehicle manufacturer Nio, have just started trading on this stock market.”