Chinese Auto Stocks Plunge In Hong Kong After Geely Slashes 2019 Net Profit By 40%

Just hours ago, we reported that passenger vehicle sales in China showed their first tepid signs of recovery after a historic and record-breaking plunge in the country over the last two years. In that article, we pointed out that the “recovery” was only due to dealers looking to blowout inventory – at massive discounts up to 50% – to prepare for new emission standards that start on July 1.

We concluded by questioning whether or not the relief would be short lived. We stated:

To say the least, it should be interesting to see how sales numbers respond for the month of July.

<!–[if IE 9]><![endif]–>

Now, it looks as though we are already starting to get an idea – and it also looks as though the “recovery” may already be over. 

China-based auto stocks in Hong Kong dropped overnight after Geely issued a profit warning and other investors are worried about China based manufacturers preparing to issue similar warnings. 

Geely said that its first half 2019 net profit likely fell by 40% and it cut its 2019 sales target. The stock was the worst performer on Hong Kong’s Hang Seng index last year. 

<!–[if IE 9]><![endif]–>

In response, Guangzhou Automobile also fell as much as 5.8% and Dongfeng Motor dropped as much as 3%. Great Wall Motor was down as much as 4.2% at one point and BAIC Motor fell 2.7%. 

<!–[if IE 9]><![endif]–>

Recall, Jefferies said in a note Monday morning that the country’s planned stimulus for the auto industry could help along cities and provinces whose economies are heavily reliant on the auto industry. 

For instance, as a result of planned subsidies, residents in places like Hunan’s capital Changsha who buy a locally produced car could get as much as 20,000 yuan in subsidies, analyst Patrick Yuan said. SAIC-VW, GAC-Mitsubishi, GAC-FCA, and BYD all have plants in Changsha. The city’s sales represent about 1.2% of China’s total market. 


Follow us:
Visited 5 times