On July 31, 2026, the Hong Kong stock market saw a structural rally. Despite a complex external environment, the Hang Seng Index climbed with strong support from the new energy vehicle sector, closing up over 1% near 26,200 points. Market sentiment improved significantly, with trading volume up nearly 20% from the previous session, indicating active capital inflows.
NEV Sector Rises Broadly
The standout performer in Hong Kong stocks today was undoubtedly the new energy vehicle sector. By the close, the NEV index surged 4.8%, with many stocks recording double-digit gains. Among them, leading stock BYD Company (01211.HK) soared over 6% to a three-month high; NIO Inc. (09866.HK) and XPeng Inc. (09868.HK) rose 8.2% and 7.5%, respectively; Li Auto (02015.HK) also gained over 5%. In addition, upstream lithium battery materials and charging pile sectors also strengthened, reflecting a broad-based rally.
Policy Support as Direct Catalyst
On the news front, the State Council officially issued the "Several Measures to Further Expand New Energy Vehicle Consumption" (hereinafter "the Measures") today, serving as the direct trigger for the sector's surge. The Measures outline multiple substantive support policies, including:
- Extending the purchase tax exemption for new energy vehicles through the end of 2027, covering a wider range of models;
- Providing fiscal subsidies for key NEV promotions in rural areas to encourage consumption in third- and fourth-tier cities and rural markets;
- Accelerating the construction of charging infrastructure, with plans to add 1 million public charging piles by the end of 2026;
- Increasing financial support for the NEV supply chain and guiding social capital into technological innovation.
Analysts noted that these policies not only directly stimulate end demand but also reinforce market confidence in the sector's medium- to long-term growth. Earlier, expectations of subsidy phase-outs had pressured valuations; now that uncertainties have cleared and favorable policies have landed, capital is flowing back strongly.
Earnings Growth Forecasts Provide Fundamental Support
Beyond policy stimulus, improving fundamentals are a key foundation for the sector's strength. As July comes to a close, several Hong Kong-listed NEV companies have released interim earnings forecasts, which are generally impressive. BYD Company expects net profit for the first half to grow more than 200% year-on-year, driven mainly by a higher share of premium model sales and overseas market expansion. NIO and XPeng have also posted record deliveries, with losses narrowing more than expected.
Additionally, battery giant CATL, although not listed in Hong Kong, has shown strong earnings growth on the A-share market, lifting valuation expectations across the supply chain. In Hong Kong, related component companies such as Ganfeng Lithium (01772.HK) and Tianqi Lithium (09696.HK) also performed strongly, rising 9.3% and 11.2%, respectively.
Institutional Views: Sector Likely to Maintain Strength
Several international investment banks released research reports today, expressing optimism about the outlook for Hong Kong's NEV sector. UBS Securities stated that, driven by policy support and falling costs, China's new energy vehicle sales in the second half of 2026 could exceed 6 million units, up 35% year-on-year. The bank raised its target price for BYD to HK$400 and maintained a "Buy" rating.
Goldman Sachs believes that current sector valuations remain reasonable and, compared with global peers, offer a certain discount, making them attractive for allocation. They advise investors to focus on leading companies with technological barriers and scale advantages, as well as firms benefiting from charging pile construction.
Fund Flows Show Institutional Accumulation
In terms of capital flows, southbound net buying reached HK$8 billion today, with the NEV sector receiving around HK$3 billion in net inflows, ranking first among all industries. Passive funds are also accelerating allocations, with several NEV-themed ETFs seeing significant share growth today. Such resonance between active and passive flows often signals sustained momentum.
Outlook and Risk Warning
Looking ahead, with policy support, earnings backing, and capital inflows converging, the NEV sector is likely to remain a core theme in the Hong Kong market. However, investors should also be wary of pullback risks from excessive short-term gains and potential supply chain disruptions from overseas geopolitical factors.
In terms of strategy, opportunities can be captured along the following dimensions:
- Prioritize leading automakers with global competitiveness and core technologies;
- Focus on upstream lithium resources and battery materials companies—"picks and shovels" players in the supply chain;
- Watch for catch-up gains in new infrastructure sub-sectors such as charging piles and intelligent driving.
In summary, the long-term logic for the new energy vehicle sector remains intact, though short-term volatility is inevitable. Investors should stay rational, align positions with their own risk tolerance, and allocate assets prudently.
