Global sales of Chinese new energy vehicles have picked up amid surging oil prices and renewed concerns over fuel shortages triggered by the ongoing tensions in the Middle East. Analysts say the rebound in sales could breathe new life into the sector in Hong Kong’s equity market, easing the prolonged pressure from slowing market demand and intensifying price competition in the world’s second-largest economy.

As the United States-Israel war against Iran remains unresolved, hopes of reopening the Strait of Hormuz are dimming, and crude oil prices have climbed more than 10 percent from a month earlier and hover around the $100 per barrel mark.

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Rising petrol costs and growing “pump anxiety” are driving more cost-conscious households and car buyers around the world to flock to showrooms, particularly those of Chinese brands. The China Passenger Car Association reported that exports of electric and hybrid vehicles by Chinese carmakers reached 349,000 units in March, up 140 percent year-on-year. BYD, one of the world’s largest EV makers, accounted for a third of the total overseas shipments with approximately 117,000 units, followed by Geely and Chery, the CPCA added.

In Australia, the latest data released by Australian Automotive Dealer Association showed that 15,839 battery EVs and 8,215 plug-in hybrid EVs were sold in March, representing a year-on-year increases of 92 percent and 40 percent respectively. China’s market share continues to expand, making Australia “a leading market for the Chinese automotive industry”, the association said.

Martini Ma Tsang-kit, councilor of the Hong Kong Securities and Futures Professionals Association, said the buoyant sentiment has offered near-term support to the NEV sector in the Hong Kong Special Administrative Region’s equity market. Related shares have shown a measured but noticeable recovery recently, he added.  

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Hong Kong-listed shares of BYD gained 3.24 percent to HK$105.10 ($13.41) on Friday. The stock has risen nearly 8 percent over the past month, while counterparts Geely and NIO jumped more than 35 percent and 21 percent, respectively.

Valuations of the segment had suffered in the past quarters amid a cooling Chinese mainland NEV market with headwinds including the narrowing profit margins, severe price competition among manufacturers, and a reduction in national tax subsidies.  

Ma said the recovered performance signals a shift from broad-based valuation compression to a more selective, fundamentals-led market. “Previously, EV stocks’ valuations were often built primarily on regulatory incentives and long-term decarburization targets. Now energy security and cost certainty are playing a more visible role in shaping consumer behavior and investor expectations,” he said.

The analyst added that the oil price hike stemming from geopolitical tensions didn't change the underlying investment logic concerning NEV industry-related equities, while it serves as a reminder of the structural shift from fossil fuels to renewables in the global energy market.

Ma expects the NEV sector to move modestly higher over the next six to 18 months, but cautioned that performance will hinge more on earnings delivery than market narratives.

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Kenny Ng Lai-yin, a strategist at Everbright Securities International, said global energy-supply concerns and the resulting surge in NEV sales have indeed buoyed the sector in Hong Kong’s stock market in the short term, though the outlook could change as geopolitics evolve.

However, he said he believes the growing popularity of NEVs is unlikely to reverse, although the positive impact on the capital market may take a long time to gradually materialize.

Ng also attributed the recent rally to the launch of new models by Chinese automakers, and their accelerated push into overseas markets.

"Overseas markets contributed a meaningful share of profits for leading Chinese carmakers, such as BYD and Geely, in recent quarters," he said, adding that this edge can help widen the companies’ moat.

JP Morgan said in a recent report that Chinese equities stand to benefit from the country’s macro resilience, though remain exposed to geopolitical uncertainties. The investment bank said it favors long-term structural growth themes such as energy security — including NEVs, energy storage systems, power equipment, aluminum, as well as artificial intelligence and robotics.

Hong Kong’s benchmark Hang Seng Index edged up 0.55 percent on Friday, closing the week at 25,893.54 points.

Contact the writer at gabylin@chinadailyhk.com