NIO sees early gains after Chinese authorities deregulate digital data

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• NIO stock gives back early gains reaped on deregulation of cross-border data.
• China’s Cybersecurity Administration has reduced scrutiny of non-personal data.
• Hang Seng index closes 2.5% higher on the news.
• US Core PCE data for August shows inflation slowing, boosts US stocks.

Nio (NIO) stock rose 1.2% early Friday, to $9.02 but then promptly gave back gains to trade lower at the time of writing. The early boost came as Chinese stocks made broad-based gains after a domestic regulatory body reduced regulations for cross-border digital data flows. Hong Kong’s Hang Seng index closed 2.5% higher on the news.

Fellow Chinese corporations Alibaba (BABA), XPeng (XPEV) and Li Auto (LI) saw their American Depository Receipts (ADRs) rise in tandem on the news. The NASDAQ rose 1.3% on Friday after a bad start to the week on positive inflation data.

US stocks are marginally higher on Friday after lower than expected Personal Consumption Expenditures (PCE) data from August. This is the Federal Reserve’s (Fed) favorite inflation marker. The reading showed Core PCE coming in at 0.1% on a monthly basis, half the rate expected by analysts. This is the first time in two years that Core PCE has dropped below 4% on an annual basis. It registered 4.3% in July.

Nio stock news: Cyberspace administration proposes to reduce data burden

China’s Cyberspace Administration released a proposal on Friday that would mean marketing, international trade and global manufacturing data that does not include personal data would not require a security review. This would make it much easier for multinational Chinese corporations like Nio, who routinely gather user data to study their products and markets.

Chinese traders view the move as one that will boost the competitiveness of Chinese firms and reduce their barriers for entry into foreign markets.

The rally is much appreciated by shareholders as NIO stock has been trying to recover from the 22%+ sell-off two weeks ago that enfolded after the electric vehicle manufacturer sold $1 billion in senior convertible notes. Conversion of the notes would mean dilution of 5% to 6% for existing shareholders, but Nio said it would be able to reduce its nearly $4 billion in outstanding debt.

Shareholders have another reason for excitement as well. On Monday, NIO shares will likely react to September delivery data. Nio has beaten expectations for deliveries in each of the last two monthly announcements, and the September delivery hurdle is lower compared to previous months. Nio only needs to deliver between 15,200 and 17,200 vehicles to meet management’s forecast for 55,000 to 57,000 units in the third quarter. Nio delivered 19,329 vehicles in August.

Nio shares were already tracking higher on Thursday after rumors made it to Reuters that management was in talks with Mercedes-Benz to trade the German automaker technology in exchange for investment. Both companies vehemently denied there were any ongoing talks.