What happened
Shares of Uxin (UXIN +3.31%) climbed more than 9% on Monday, riding a broader wave of optimism stemming from an agreement between the United States and China to resume trade talks. Uxin, a Chinese online used-car platform, doesn't have a lot of direct exposure to U.S.-China trade, but the company is in an economically sensitive industry that would be hit hard if tariffs impact that Chinese economy.
So what
There were no specific headlines on Uxin to cause the Monday jump, but Chinese companies across the board were reacting favorably to news that President Donald Trump and Chinese President Xi Jinping had held a productive meeting during the Group of 20 summit in Osaka, Japan, putting trade talks back on track.
Image source: Getty Images.
Uxin has been a highly volatile company throughout its brief history trading publicly, debuting at $9 per share a year ago before falling to $3 in December. It rebounded following a partnership with Alibaba, but was hit by a short-seller in April.
The company has also traded on U.S.-China headlines in the past. Although Uxin is not an importer or an exporter, there have been fears that Chinese consumers would become reluctant to spend on big-ticket items like cars in a period of economic uncertainty.
Now what
Uxin is an early-stage company, and until it further establishes itself, investors should expect volatility. The company's recent results indicate Uxin is moving in the right direction, but it is going to take quarters, if not longer, before it is large and established enough not to move dramatically on macro headlines.
Investors in Uxin can enjoy the gains today, but be forewarned that it will likely only take one or two negative headlines about trade talks to send shares headed in the other direction. For long-term holders, it's best to ignore the volatility and focus on fundamentals.
