What happened
Shares of the Chinese electric vehicle (EV) maker Nio (NIO 0.25%) fell today after President Biden unveiled the Indo-Pacific Economic Framework (IPEF) yesterday. The drop comes just one day after Nio's shares slid 5%.
The IPEF could be a way for the U.S. to counter China's economic dominance in the Indo-Pacific region, and Chinese stock investors are concerned that it could lead to more division between the U.S. and China. As a result, Nio's stock plunged 7.8% as of 1:14 p.m.
So what
Chinese stock investors have already been on edge for months as U.S. regulators have threatened to delist some Chinese stocks listed on U.S. exchanges if they don't comply with specific auditing requirements set by the Securities and Exchange Commission (SEC).
Image source: Nio.
Those fears and the economic tension between the U.S. and China have wreaked havoc on many Chinese stocks over the past few months.
Now, with Biden attempting to strengthen its economic position in the Indo-Pacific region, it appears that investors of Chinese stocks are worried that the move could further damage relations between the two countries.
The IPEF would help establish international rules between Australia, Japan, and South Korea for things like supply chains, worker regulations, and the digital economy, according to a press release.
Now what
Nio investors are clearly worried that Chinese stocks will continue to have a rough time as the U.S. and China try to position themselves as the dominant economic power.
This struggle comes at a time when Chinese stocks are already struggling because of China's strict zero-covid policy, which has caused some of Nio's vehicle manufacturing plants -- and many other businesses -- to shut down recently.
Nio investors should probably prepare for more volatility from the stock as the broader EV market struggles amid high inflation and soaring production costs, and as economic tensions between the U.S. and China have a significant effect on Nio's share price.
