China EV maker BYD shares fall after Warren Buffett cuts stake

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Hong Kong-listed shares of BYD collapsed on Wednesday after Warren Buffett’s Berkshire Hathaway cut its stake in the Chinese electric car maker — and one fund manager said this could be a warning sign that more is to come.

The conglomerate slightly reduced its shares from 20.04% to 19.92%, according to a filing on the Hong Kong stock exchange. Berkshire sold 1.33 million shares of BYD for about $47 million — the conglomerate now owns 218.7 million shares, the filing showed.

“This is a common trend for investors who are starting to withdraw cash from the market,” Yang Liu, Atlantis Investment’s chairman and chief investment officer, told CNBC’s “Squawk Box Asia” on Wednesday.

“Maybe we’ll see more.”

BYD shares plunged more than 12% during Wednesday’s session in Hong Kong and were the worst performer on the Hang Seng index, according to data from Refinitiv. The stock has risen more than 600% in the past 10 years.

Earlier this week, the company reported strong figures for the first half of 2020 with net income for the period totaling 3.6 billion yuan ($521 million), a threefold increase from a year earlier.

When asked what this means for China’s electric vehicle market, Liu said Berkshire’s latest move could be “warning signs that the market [coming] to a major correction.”

“There are too many uncertainties and I think [Buffett] got a little nervous,” she said. “Maybe this recession ahead for the US economy and also weaker Chinese consumption will take investor confidence to a larger scale.”

Room for more stimulus in China

Looking ahead to China’s upcoming National People’s Congress in October, Liu said China has room for more government stimulus, saying the current package was “not enough”.

Last week, China’s State Council announced a slew of stimulus worth tens of billions of dollars as the country looks to boost its economy, which has been battered by Covid lockdowns and a real estate crisis.

“There is room for the government to help the economy and boost confidence,” said the fund manager.

She said people will look for clues about the government’s growth prospects “to see what’s going on.”

“It will give us a great indication” [on] where China’s economy will go,” including the direction of the government’s zero-covid policy and what measures will be taken to address low consumption, she said.

“The economy needs confidence to believe, it’s all about confidence now,” Liu added.

Yun Liu of CNBC contributed to this report.

The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

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