While retail stocks were higher thanks to better than expected earnings from Kohl’s and Abercrombie & Fitch, the markets still pulled back as fears of slowing global economic growth persist. At the close the Dow was off 133 at 25,673. Trading volume was higher.
The South China Morning Post is reporting that next week, China is expected to pass a new law designed to protect the interests of foreign investors by making it illegal to force investors to set up joint ventures and transfer their technology. The legislation is an effort to attract investors to China and help offset the current economic slowdown which is the worst in 28 years. While China still needs to continue work on curbing technology theft and piracy by individuals, this report shows that progress is being made.
Two weeks ago, 60 Minutes ran a segment on a Chinese electric car startup called Nio. The segment reported on China’s effort to become a leader in EVs and spoke glowingly of Nio and its young dynamic founder. After the report aired, shares of Nio shot higher. Well today Nio announced that it was suspending efforts to build a factory and will continue to contract out its manufacturing amid a “greater than anticipated sequential decrease in deliveries” which it attributed to several factors including a slowing Chinese economy. Shares plummeted. Nio is a startup and is locked in a battle for Chinese electric car supremacy with several competitors including Tesla which sold about $1.7 billion worth of cars last year in China and is currently building a gigafactory there. This is a tale of caution to investors wanting to get in on the EV revolution. There are many companies jumping on the bandwagon but it will take time to sort out who the winners will be.