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Kwong Man-ki

Shares of mainland carmaker BYD, partly owned by Warren Buffett's Berkshire Hathaway, plunged yesterday, triggering a flurry of market rumours that the company dismissed even as it failed to specify the cause.
The stock fell by up to 46.9 per cent to HK$18.70 before recovering some ground to end the day at HK$25.05, down 28.8 per cent in the largest single-day drop on record.
Volume was 252.7 million shares, 34 times Wednesday's trade. Turnover soared to HK$6.04 billion from HK$257.2 million.
In Shenzhen, BYD's shares were suspended in the afternoon after they fell the 10 per cent daily limit. They were last traded at 34.43 yuan (HK$43.57).
BYD said in a statement to the Hong Kong exchange it had noted the unusual drop in price and rise in trading. "The board is not aware of reasons for such movement or information," it said.
Company secretary Li Qian dismissed rumours regarding the cause of the slump, from the rouble's rout to Buffett's loss of interest in the company.
Li said BYD did not know the reasons but asserted the price plunge had nothing to do with its operations or fundamentals.
He said the company had no information that Berkshire Hathaway had reduced its stake in BYD as it could not be confirmed because of the time difference with the United States. "But according to our recent contact with Buffett, we don't think he intends to sell his stake," he said.
Li also dismissed rumours that chairman Wang Chuanfu had been arrested.
Harry Chen, an analyst with Guotai Junan Securities, was also unsure why the stock fell. "It's more likely caused by a sell-off by funds," he said.
One of the strongest rumours cited the collapse of the Russian currency, which would hurt Chinese carmakers.
Geely Automobile Holdings on Tuesday said its net profit for this year would plunge about 50 per cent as a result of the drop in exports and foreign exchange losses from operations in Russia, its biggest foreign market.
"Russia is not an important market for BYD," Li said, adding that its sales in that market was lower than US$1 million this year.
General Motors and Jaguar Land Rover have temporarily stopped selling cars in Russia this week to avoid losses.
Guoyuan Securities analyst Li Ming agreed that the rouble should have minimal impact on BYD as the company's exports to Russia were insignificant.
BYD's shares fell earlier this month on rumours that the government might reduce the purchases of electric buses as it considers replacing pure battery electric buses with hybrid trams. Li said orders for electric buses remained strong.


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Rumours of Berkshire Hathaway cutting its stake in electric car maker BYD were partly cited for yesterday's heavy sell-off in the mainland company. Photo: Reuters

Business

Money

Markets & Investing

China Business

Mainland carmaker plunges record 28.8 per cent in heavy trading


Shares of mainland carmaker BYD, partly owned by Warren Buffett's Berkshire Hathaway, plunged on Thursday, triggering a flurry of market rumours that the company dismissed even as it failed to specify the cause.
