Analysis of Market Drivers for Pre-Market Declines in Chinese Concept Stocks and Reference for Investors

According to the market observation provided, popular Chinese concept stocks in U.S. pre-market trading showed a general downward trend:

• New energy vehicle stocks: XPeng Motors fell more than 4%, Li Auto and NIO fell more than 3%
• Other Chinese concept stocks: Tiger Brokers fell more than 1%
• Individual gains: Dingdong Maicai rose more than 4%, Pony.ai rose more than 1%

At the same time, according to real-time quotes (regular trading hours) from the brokerage API on December 31:

• XPeng Motors (XPEV): reported $20.01, a drop of -5.97%
• NIO (NIO): reported $5.00, a drop of -9.00%
• Li Auto (LI): reported $16.48, a drop of -4.60%
  Note: The above data are for regular trading hours, which differ from pre-market quotes and gains. Pre-market and intraday closing should be regarded as two independent trading signals and analyzed separately [0].

• The three major U.S. stock indexes have adjusted continuously: The S&P 500 Index closed down 0.30% on December 31, Nasdaq down 0.23%, and Dow Jones down 0.29%, and have shown weak performance for multiple consecutive trading days (e.g., S&P fell 0.14%, Nasdaq fell 0.24%, Dow Jones fell 0.20% on December 30) [0]
• Lack of “Christmas rally” momentum at the index level: The traditional seasonally strong phase in the last five trading days and the first two trading days of the new year failed to materialize, indicating that investors are cautious
• Cautious market sentiment: Stock index futures generally fell on the eve of trading days, with Nasdaq 100, S&P 500, and Dow Jones futures recording small declines, reflecting a cooling of capital risk appetite

• General pressure on the sector level: Multiple sectors such as technology, finance, real estate, energy, and consumer cyclicals recorded declines on December 31, among which the consumer cyclicals sector fell by -0.64% and the financial sector fell by about -0.45% [0]
• Year-end capital rebalancing pressure: Near the end of the year, institutional investors have the need to take profits and adjust positions, and high-volatility growth stocks and relatively high-valued targets are more likely to encounter profit-taking pressure
• Chinese concept stocks overall follow the market environment: Against the background of pressure on U.S. stock technology and consumer cyclical sectors, Chinese concept growth stocks associated with risk appetite are more likely to be affected by capital spillover

• Intensified competition: The supply of electrification at home and abroad continues to expand, price and product competitiveness competition intensifies, and the market is more cautious about profit and share expectations
• Global policy adjustments and subsidy retreat: Some U.S. EV tax credit policies will change in 2025, coupled with some traditional car companies adjusting their electrification pace (e.g., Ford reducing its commitment to large EVs and making impairment provisions), the market has a wait-and-see mood about overseas EV demand and policy support [1]
• Valuation and fundamental pressure: Chinese concept new energy vehicle companies are generally in the loss or high valuation stage. Against the background of high interest rate environment or tight liquidity, high-valued growth stocks are more sensitive to marginal changes in policies and demand

• Geopolitical and regulatory sentiment: Chinese concept stocks are still affected by Sino-U.S. economic and trade and regulatory communication expectations, and market sentiment is easily disturbed by policy uncertainty [2]
• Domestic macro factors: Although the A-share market performed well throughout the year (e.g., reports indicate that the Shanghai Composite Index rose more than 18% for the year [3]), the market still has a wait-and-see attitude towards the domestic economic recovery pace and structural policies, which will affect the overall performance of Chinese concept stocks through A-H/U.S. stock linkage

• Pre-market trading characteristics: Relatively low liquidity, price fluctuations reflect more news and sentiment, and are prone to “fake moves” with amplified emotions
• Quantitative and stop-loss orders: Some strategy funds trigger passive selling when touching technical levels or volatility thresholds, amplifying the magnitude of short-term adjustments
• Year-end book adjustment: Some institutions have position management needs at the end of the year or quarter window, which may stage sell Chinese concept targets with large fluctuations

• Pre-market ≠ intraday conclusion
  : Pre-market quotes and intraday closing are two independent signals and cannot be simply extrapolated. It is recommended to wait for the opening to observe trading volume and price behavior to determine whether sentiment is repaired or continued [0]
• Observe changes in trading volume
  : If there is a large volume decline during regular trading hours, the short-term adjustment signal is stronger; if there is a small volume shock, the sustainability of pre-market sentiment is questionable
• Key price observation
  : Pay attention to key support and resistance levels (previous low/previous high, moving average position) during the day to judge the nature of the correction (technical vs. trend)

• Continued industry differentiation
  : Competition, profits, and export policies of Chinese concept new energy vehicle companies will determine the valuation repair path; companies with stable fundamentals, strong execution, and improved cash flow have more repair flexibility
• Policy tracking
  : Closely follow domestic macro policies (e.g., support for car consumption, continuation of replacement subsidies) and changes in EV and tariff policies in the U.S./Europe, which will become important catalysts for valuation revaluation [1]
• Macroeconomic environment
  : Inflation and interest rate paths, RMB exchange rate, and cross-border capital flows will all have marginal impacts on the overall risk premium of Chinese concept stocks [2]

• Profit realization
  : Focus on the improvement rhythm of revenue and gross profit margin, R&D and capital expenditure efficiency, cash flow, and balance sheet health
• Competitive barriers and management execution
  : Technology and product iteration, channel and brand moat, cost control and pricing power
• Valuation and margin of safety
  : In market fluctuations, indicators such as PEG, PS, and target price implied return rate help screen targets with better risk-return ratios

• Batch position building and dynamic adjustment
  : Avoid single-point betting, adopt batch layout, and dynamically increase or decrease positions based on trading volume and valuation position
• Diversified allocation
  : Do not take a single industry or single market as the only exposure, and appropriately combine cross-market allocation such as A-shares, Hong Kong stocks, and U.S. stocks to reduce the impact of single market sentiment
• Set stop-loss and rebalancing discipline
  : Strictly implement risk management plans, control exposure when the trend is unclear, and increase positions when fundamental improvements are confirmed

• Core drivers of pre-market decline
  : The combined effect of overall U.S. stock correction transmission, sector capital rebalancing, competition and policy uncertainty in the new energy vehicle track, sentiment disturbance of Chinese concept stocks, and technical aspects and short-term capital behavior [0][1][2]
• Tips for investors
  : Pre-market signals should not be extrapolated as intraday conclusions; in the short term, observe trading volume and price behavior, track policies and industry fundamentals in the medium term, and focus on profit realization and valuation margin of safety in the long term [0]
• Operation strategy
  : Adopt a combination of batch position building, cross-market diversification, and strict risk management to find high-quality targets with fundamental support and valuation attractiveness in fluctuations

• [0] Jinling API Data
• [1] TipRanks - “U.S. Stock Futures Edge Lower Ahead of Last Day of 2025” (https://www.tipranks.com/news/u-s-stock-futures-edge-lower-ahead-of-last-day-of-2025)
• [2] TechStock² - “EV Stocks Today: Tesla Faces California Sales Threat…” (https://ts2.tech/en/ev-stocks-today-tesla-faces-california-sales-threat-as-ford-pulls-back-on-batteries-and-the-eu-softens-2035-ev-rules-dec-18-2025)
• [3] Yahoo Hong Kong Finance - 《Shanghai and Shenzhen》On New Year’s Eve, the three major A-share indexes moved individually, and the Shanghai Index rose more than 18% for the year (https://hk.finance.yahoo.com/news/滬深-除夕日a股三大指數走個別-滬指全年升逾18-070003440.html)