Shares of Nio Inc. experienced their third consecutive loss on Thursday, dropping to a two-month low, as part of a broad selloff in U.S.-listed stocks of China-based companies.

Weak Chinese Exports Contribute to Market Downturn

This selloff was triggered by new data revealing an 8.8% decline in China’s exports compared to the previous year, indicating continued weak demand for Chinese-made products.

While the August decline was better than economists’ expected 10% drop, and it marked an improvement from July’s 14.5% decrease, it still marked the fourth straight month of falling exports. As a result, the Shanghai SE Composite Index closed down 1.1% overnight, and Hong Kong’s Hang Seng Index slid 1.3%.

Concerns Over Trade Tensions

This drop in exports has only added to the growing concerns surrounding trade tensions between the U.S. and China. Recent reports suggest that China has banned government officials from using Apple Inc.’s iPhones at work, following a visit by U.S. Commerce Secretary Gina Raimondo to Beijing last week.

Impact on U.S.-listed China-based Companies

In the U.S., the Invesco Golden Dragon China ETF (PGJ), which tracks U.S.-listed companies based in China, experienced a significant downturn of 3.9% during midday trading. Of its 74 equity components, 66 saw a loss in value. The ETF has now fallen 6.3% over three consecutive days of losses.

Nio’s ADS, which is the most actively traded component of the ETF, also suffered a decline of 5.2%. This puts the stock on track for its lowest closing price since July 7, with a trading volume of 28.9 million shares. In the past three days alone, the electric vehicle maker’s stock has dropped by 8.8%, and it has tumbled 35.1% since reaching an 11-month high of $15.46 on August 3.

Unfavorable Market Conditions Impacting China-based Companies

In recent trading sessions, several China-based companies have experienced a significant decline in their stock prices. This downward trend has affected various sectors, including electric vehicle (EV) manufacturers, e-commerce giants, and real estate developers.

Electric Vehicle Industry Challenges

Xpeng Inc.’s stock (XPEV) has slumped by 8.1%, while Li Auto Inc. shares (LI) have fallen by 3.0%. These companies, among others in the EV industry, have faced challenges that have impacted their stock performance.

Impact on Golden Dragon China ETF (PGJ)

PDD Holdings Inc. (PDD), which carries the heaviest weighting in the Golden Dragon China ETF (PGJ), experienced a 5.4% drop in its American depositary shares (ADS). This decline has contributed to the overall negative performance of the ETF.

E-commerce Giants Encounter Difficulties

Shares of Alibaba Group Holding Ltd. (BABA), a prominent e-commerce giant, suffered a 4.5% loss and have continued to decline for three consecutive days. Similarly, other companies in the e-commerce sector, such as Inc. (JD), have experienced a 4.1% decrease in their stock prices.

Real Estate Developer Faces Challenges

Country Garden Holdings Co. Ltd.’s U.S.-listed stock (CTRYF), although not a component of the PGJ, has tumbled by 20.4%. This decline follows a substantial surge of 45% over the previous two sessions, triggered by the company’s announcement of creditor approval to restructure a nearly $550 billion bond.

Other Companies Affected

Various other companies have also been impacted by the unfavorable market conditions. The stocks of Bilibili Inc. (BILI), KE Holdings Inc. (BEKE), Baidu Inc. (BIDU), Group Ltd. (TCOM), and others have experienced declines ranging from 3.4% to 6.6%.

Market Summary

Despite the recent challenges faced by China-based companies, the Golden Dragon China ETF (PGJ) has managed to gain 3.4% over the past three months. Comparatively, the S&P 500 index (SPX) has recorded a slightly higher increase of 4.4% during the same period.

While these market conditions present uncertainties for China-based companies, investors continue to monitor the situation closely to make informed decisions about their investment portfolios.

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