HONG KONG: Shares in Chinese car maker BYD, which plunged almost 30 percent in the previous session amid speculation about its business outlook, recovered partially in Hong Kong Friday after it moved to quash the rumours.
The firm, which is backed by US billionaire Warren Buffett, ended up 14.17 percent at HK$28.60 in the afternoon Friday after it issued a statement denying talk that the investment icon intended to sell a large part of his stake.
The rumour was one of several late on Thursday as the firm plunged as much as 47 percent at one point before paring the losses to end down 29 percent.
Reports also said it had been hit by huge foreign exchange losses from its businesses in Russia -- where the ruble is being hammered -- that large fund investors were pulling out and that orders for its electric buses had tumbled.
However, in a statement to the Hong Kong exchange, where it is listed, BYD stated it had contacted Buffett's firm Berkshire Hathaway and said "the intention to reduce shareholdings in the company is not correct and that it has no present intention to reduce shareholdings".
It added that the value of its products in Russia, where the ruble has plunged on falling oil prices and Western sanctions over Ukraine, were less than $1 million and were traded in dollars, not rubles.
BYD also said its electric vehicle business was "in normal conditions and the number of customer orders ... has not substantially decreased". Regarding funds pulling out, it said "such incidents are market behaviours of which the Board is not in a position to verify and the board has no comments thereon".
Harry Chen, an auto analyst with Shenyin & Wanguo Securities in Shanghai, told AFP: "We think (the slump) was more because of market manipulation. It didn't have much to do with the company's business fundamentals. Therefore there was the rebound today."
He said "no one really knows the reason behind it" but added "I think it is probably because some investors were closing a position".
Some reports said BYD dismissed rumours that its chief Wang Chuanfu was being questioned by authorities, rumours Chen said may have emerged because of the recent fall of some officials in Shenzhen, where the company is based, as BYD had "very good" government relations there.
In a conference call late Thursday, company secretary Qian Li said BYD's operations were normal despite the share plunge and described speculation circulating in the market as "ridiculous".
The firm, which began as a manufacturer of rechargeable lithium-ion and nickel batteries, drew international attention when Buffett bought a 9.89 percent stake in it for $230 million in 2008.
Outside its core auto business, BYD also makes solar batteries and other photovoltaic products.
Comments
Comments are closed.