Shares of Chinese electric vehicle maker BYD fall after Warren Buffett cuts his stake

Shares of Hong Kong-listed BYD fell on Wednesday after Warren Buffett’s Berkshire Hathaway cut its stake in the Chinese electric carmaker – and a fund manager said it could be a harbinger of more to come .

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

“This is a common trend for investors who are starting to pull money out of the market,” Yang Liu, president and chief investment officer of Atlantis Investment, told CNBC’s “Squawk Box Asia” on Wednesday.

“Maybe we’ll see more.”

Shares of BYD plunged more than 12% in Wednesday’s Hong Kong session and were the worst performer on the Hang Seng Index, according to Refinitiv data. The stock has jumped more than 600% in the past 10 years.

Earlier this week, the company reported strong numbers for the first half of 2020, with its net profit for the period totaling 3.6 billion yuan ($521 million), tripling from a year earlier.

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

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

Room for more stimulus in China

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

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

“The government has an opportunity to help the economy and boost confidence,” the fund manager said.

She said people will be looking for clues about the government’s growth prospects “to see what happens.”

“That will give us a big indication [on] where will China’s economy go,” including the direction of the government’s zero-Covid policy and the measures that will be taken to tackle low consumption, she said.

“Economy needs trust to believe, now it’s all about trust,” Liu added.

CNBC’s Yun Liu contributed to this report.

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