BYD shares post their best one-month gain since 2025. Why are they benefiting from the war?

Shares of Chinese electric car maker BYD may show in March the best monthly growth for more than a year. The company turned out to be a beneficiary of the global rise in oil prices due to the US war with Iran: this supports demand for electric cars, Bloomberg writes.

Shares of BYD, traded in Hong Kong, rose almost 12% in March, becoming one of the leaders of the Hang Seng Tech Index, which tracks the largest technology companies. The securities of other electric car makers, Nio and Zhejiang Leapmotor, are showing similar dynamics. Before the war, the sector, on the contrary, was declining amid fears of weak demand and fierce price competition in China, the agency notes.

In an attempt to turn the tide, BYD introduced new models and more powerful batteries in early March. A recovery in demand in the domestic market could be an additional driver for the stock, which is still holding more than 30% below the all-time high reached last May, Bloomberg suggests.

In trading in Hong Kong on March 27, the company's securities rose by 4.7% ahead of the publication of the statements.

The company's foreign sales in the first two months of the year grew by 50% year-on-year. At the same time, the company is recording a sharp increase in orders in Central and South America. Entry into overseas markets may also accelerate thanks to the introduction of BYD's proprietary charging technology, especially in countries where charging speeds and infrastructure remain key constraints, Bloomberg reports. In addition, BYD dealerships across Asia continued to see strong demand for cars in March amid rising gasoline prices, Bloomberg reports.

"Expansion overseas has become a necessity for Chinese automakers," said Third Bridge analyst Rosalie Chen. She said BYD's own battery production and pricing advantages allow BYD to maintain high margins on export sales and "effectively capitalize on demand growth driven by higher oil prices."

At the same time, the domestic market, which Chen characterized as "oversaturated," remains difficult. Price competition and the gradual withdrawal of incentives from Beijing are putting pressure on sales: by the end of 2025, the company is expected to show the weakest sales growth in six years - about 7.6%, the agency writes.

Shares are rising on expectations of a sales recovery this year due to new model launches, technology adoption and above all continued positive momentum in overseas markets, said Kevin No, head of Asian equities at Financiere de L'Echiquier.

"We are seeing reports from the Philippines and Indonesia where people are lining up to buy an electric car. In the longer term, this will help restore interest in electric cars and bring them back into the focus of consumer attention, especially in developed countries," said Leonid Mironov, portfolio manager at Gavekal Capital.

At the same time, there is still skepticism about BYD shares: this is reflected, in particular, in the growth of short positions on them. According to S&P Global, the share of short positions from freely traded shares increased from 0.7% to 3.8% at the beginning of the year, Bloomberg reports.

"Although BYD's products are increasingly recognized overseas, the company has yet to prove that it can retain domestic market share. After recent technology launches, traffic at dealerships has increased, but there is still no sustainable recovery in orders," said Ming Li, an analyst at BofA Securities.

Of the 28 analysts covering BYD stock, the majority - 23 - advise buying it. Three advise holding them in a portfolio and two advise selling them.

This article was AI-translated and verified by a human editor