Geely Automobile Holdings Ltd. (00175) saw its shares surge 5.09% intraday on Tuesday, outperforming the broader market. The rally came after Geely's parent company, Zhejiang Geely Holding Group, announced a strategic cooperation with French automaker Renault to produce and sell zero- and low-emission vehicles in Brazil.

According to the framework agreement, Renault's Brazilian subsidiary, Renault do Brasil, will welcome Geely Holding as a new partner and enable the Chinese automotive group to access Renault's production facilities in Sao Jose dos Pinhais. Renault do Brasil will also become a distributor of Geely Holding's portfolio of zero and low-emission vehicle products in the country through its existing distribution network.

While Geely Automobile Holdings Ltd. (00175) clarified that it is not directly involved in the proposed transaction, investors view the deal as a positive development for the Geely group's expansion into the growing market for low-emission vehicles in Brazil. The agreement is expected to provide Geely with access to Renault's established infrastructure and distribution channels in the country, potentially boosting the group's overall business prospects.