I'm LongbridgeAI, I can summarize articles.Soaring oil prices have unexpectedly ignited the Chinese electric vehicle sector—BYD's Hong Kong shares surged 8% in March, marking its best monthly performance in over a year. The conflict involving Iran has pushed oil prices higher, leading consumers in the Philippines and Indonesia to queue for electric vehicles; overseas sales in the first two months jumped 50% year-on-year, as the export narrative reshapes valuation expectations
Soaring oil prices are reshaping the investment logic for electric vehicles, with BYD's Hong Kong shares achieving their best monthly gain in over a year in March, driven by overseas markets as a core valuation catalyst.
The oil price shock triggered by the conflict involving Iran is providing an unexpected catalyst for the Chinese electric vehicle sector. BYD's Hong Kong shares rose by a cumulative 8% in March, making it one of the top-performing stocks on the Hang Seng Tech Index for the period alongside Nio and Leapmotor. Previously, the sector had been under pressure for months due to sluggish domestic demand and price war pressures.
Strong momentum in overseas markets is a key support for this rebound. BYD's overseas sales surged 50% year-on-year in the first two months of this year, with noticeable increases in dealer foot traffic in Asian markets such as the Philippines and Indonesia. Simultaneously, orders from Central and South America have also surged.
Investors are now focusing on the earnings results and full-year guidance set to be released this Friday to assess the sustainability of this export-driven recovery.
Oil Price Shock Reignites Overseas Demand
The conflict involving Iran has pushed international oil prices higher, directly stimulating the appetite for electric vehicles among consumers in emerging Asian markets. According to Bloomberg reports, consumers in the Philippines and Indonesia have been seen queuing to purchase electric vehicles.
Leonid Mironov, a portfolio manager at Gavekal Capital Ltd., stated: "In the long run, this will help rebuild the market narrative and consumer perception of electric vehicles, especially in developed markets."
Rosalie Chen, an analyst at Third Bridge, pointed out that "overseas expansion has become an inevitable choice for Chinese automakers." She believes that the cost advantage brought by BYD's in-house battery production enables the company to achieve strong profitability in its export business and "effectively capture the demand shift driven by rising oil prices."
BYD delivered 1.05 million vehicles overseas last year and has set a target to sell 1.3 million vehicles in markets outside China this year. If its self-developed next-generation fast-charging technology can be implemented in overseas markets, it is expected to further overcome the two key bottlenecks: charging speed and insufficient infrastructure.
Widening Divergence Between Bulls and Bears, Rebound Sustainability in Doubt
However, market divergence regarding BYD is widening. According to S&P Global data, the proportion of short positions relative to free-float shares has climbed from 0.7% at the start of the year to 3.2%. This marked increase in bearish bets reflects some investors' doubts about the sustainability of the rebound.
Nevertheless, the bullish camp is also gaining ground. Kevin Net, head of Asian equities at Financière de l'Échiquier, stated that the strong performance of BYD's stock is driven by market expectations for a sales recovery this year, fueled by new model launches, technological debuts, and most importantly, sustained positive momentum in overseas markets.
Ming Lee, an analyst at BofA Securities, believes that BYD's products are gaining recognition overseas, but the company still needs to prove it can defend its domestic market share. "Store traffic has picked up following recent technology releases, but we are still waiting for clearer signals of a sustained recovery in orders."
Currently, BYD's stock price remains down more than 30% from its all-time high set in May last year. This Friday's earnings release and full-year guidance will be a crucial juncture in testing whether this rebound can transform into a structural trend.