Chinese Automobile Stocks Slump After Warren Buffett Trims BYD Stake

By Ambar Warrick 

Investing.com-- Major Chinese automobile stocks slumped on Wednesday after Warren Buffett’s Berkshire Hathaway (NYSE:BRKa) sold part of its stake in automaker BYD Co. 

Shenzhen-listed shares of BYD (SZ:002594) sank over 7% in morning trade, while those of China’s big four carmakers- Guangzhou Automobile Group (SS:601238), SAIC Motor (SS:600104), Chongqing Changan Automobile (SZ:000625) and Faw Car (SZ:000800) sank between 2% and 5%. 

BYD’s (HK:1211) Hong Kong shares plummeted over 10%, and were the worst performers on the Hang Seng index. Losses in automobile stocks also dragged China’s blue chip Shanghai Shenzhen CSI 300 index down 0.6%. 

A filing on Tuesday showed that Berkshire Hathaway cut its stake in BYD to 19.9% from 20.04% last week. The move comes after weeks of speculation over the move, after Berkshire mobilized its shares onto Hong Kong's settlement system in July.  

BYD is China’s largest electric vehicle maker, recently overtaking Tesla (NASDAQ:TSLA) in terms of global sales. The firm also logged a nearly 300% jump in its net income for the first six months of 2022.

But Berkshire’s stake sale may indicate doubts over the firm’s future prospects, especially with economic activity in China grinding to a halt due to COVID-19 lockdowns. 

BYD and most of its peers faced severe manufacturing headwinds earlier this year from a lockdown in the major hub of Shanghai. 

Buffett’s Berkshire is also collecting bumper profits from its sale of BYD shares. The hedge fund had first purchased 225 million shares in BYD in 2008, for about $230 million, according to Bloomberg.

Since then, Hong Kong-listed shares of the firm have surged over 2000%.