Rising oil prices are reshaping the investment thesis for electric vehicles, with BYD's Hong Kong-listed shares posting their strongest monthly gain in over a year during March. Overseas market expansion has become the primary driver boosting valuations. The oil price shock triggered by the Iran conflict is serving as an unexpected catalyst for China's electric vehicle sector. BYD's Hong Kong shares accumulated an 8% increase in March, ranking among the top performers in the Hang Seng Tech Index alongside Nio and Leapmotor. The sector had faced persistent pressure in previous months due to weak domestic demand and intense price competition.
Strong overseas momentum provides crucial 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 customer traffic at dealerships across Asian markets like the Philippines and Indonesia. Simultaneously, order volumes from Central and South American markets have substantially increased. Investor attention is now focused on the upcoming earnings report and full-year guidance scheduled for release this Friday, which will help assess the sustainability of the export-driven recovery.
The oil price surge has reignited overseas demand for electric vehicles. The Iran conflict-driven rise in international oil prices is directly stimulating purchase interest among consumers in emerging Asian markets. Reports indicate consumers are queuing to buy electric vehicles in countries like the Philippines and Indonesia. A portfolio manager at Gavekal Capital Ltd. noted that over the long term, this development will help rebuild the market narrative and consumer perception of electric vehicles, particularly in developed markets.
An analyst from Third Bridge emphasized that overseas expansion has become an inevitable strategy for Chinese automakers. She pointed out that BYD's cost advantage from self-produced batteries enables strong profitability in export operations, allowing the company to effectively capture demand shifts 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 outside China this year. The potential overseas implementation of its self-developed next-generation fast-charging technology could address two critical bottlenecks: charging speed and infrastructure limitations.
However, market divergence regarding BYD is widening. Data shows short interest as a percentage of free float has climbed from 0.7% at the beginning of the year to 3.2%, reflecting growing skepticism among some investors about the rebound's sustainability. Meanwhile, bullish sentiment is also accumulating. The head of Asian equities at Financiere de L'Echiquier attributed BYD's strong stock performance to market expectations for sales recovery this year, driven by new model launches, technological advancements, and most importantly, continued positive momentum in overseas markets.
A Bank of America Securities analyst acknowledged that BYD's products are gaining recognition overseas but noted the company must also demonstrate its ability to maintain domestic market share. While store traffic has improved following recent technology announcements, clearer signals of sustained order recovery are still awaited. BYD's current stock price remains more than 30% below its all-time high recorded last May. This Friday's earnings release and annual guidance will serve as a critical test for whether the current rebound can evolve into a sustained upward trend.