Shares of Chinese automaker BYD Co Ltd (比亞迪), which plunged almost 30 percent in the previous session amid speculation about its business outlook, recovered partially in Hong Kong yesterday after it moved to quash the rumors.
The firm, which is backed by US billionaire Warren Buffett, closed up 14.17 percent at HK$28.60 yesterday afternoon after it issued a statement denying talk that the investment icon intended to sell a large part of his stake.
The rumor was one of several late on Thursday as the firm plunged as much as 47 percent at one point, before paring the losses to close 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 Stock Exchange, BYD said that it had contacted Buffett’s firm Berkshire Hathaway Inc and said “the intention to reduce shareholdings in the company is not correct and that it has no present intention to reduce shareholdings.”
Buffett bought a 9.89 percent stake in BYD for US$230 million in 2008.
BYD said the value of its products in Russia, where the ruble has plunged on falling oil prices and Western sanctions over Ukraine, were less than US$1 million and were traded in US dollars, not rubles.
BYD also said its electric vehicle business was “in normal conditions and the number of customer orders ... has not substantially decreased.”
“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,” said Harry Chen (陳歡瑜), an auto analyst with Shenyin & Wanguo Securities Co (申銀萬國證券) in Shanghai.
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 also dismissed rumors that chief executive Wang Chuanfu (王傳福) was being questioned by authorities, rumors Chen said may have emerged because of the recent fall from grace of some officials in Shenzhen, where the company is based, as BYD had “very good” government relations there.
In a conference call late on Thursday, company secretary Qian Li (李黔) said BYD’s operations were normal, despite the share price plunge and described the speculation circulating in the market as “ridiculous.”
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