Chinese auto part makers and dealers rally on optimism Beijing will cut tariffs on US car imports to 15 per cent
- China’s cabinet will review a proposal to reduce levies on cars made in the US, according to reports
- Easing in trade tensions seen as beneficial to Chinese auto-part makers with exposure to sales overseas
Chinese auto-related stocks, from accessory makers to dealers, jumped on Wednesday on speculation that Beijing will lower tariffs on the import of US cars, tempering a report showing a decline in sales in the world’s biggest auto market.
Auto-part makers that have exposure to overseas sales including Kuang-Chi Technologies and Chengdu Xiling Power Science & Technology jumped by the 10 per cent daily limit in Shenzhen. Dealers China Yongda Automobiles Services Holdings rose as much as 4.6 per cent in Hong Kong.
China’s cabinet will review a proposal in the coming days to reduce levies on cars made in the US to 15 per cent from 40 per cent currently, Bloomberg News reported, citing people familiar with the matter.
If approved, that will bring the tariff on a par with other countries. The move came before top negotiators from the nations will soon start a 90-day negotiation to resolve the trade dispute.
Imports from the US barely account for 5 per cent of China’s car market.
The strained China-US relations also eased after the chief financial officer of Huawei Technologies, Sabrina Meng Wanzhou, who had been earlier detained in Vancouver at the request of the White House, was released on bail after a hearing.
“Any improvement in the US-China relationship will be warmly welcomed by markets and the announcement on auto tariffs does illustrate that there is an upside,” said Kerry Craig, a global market strategist at JPMorgan Asset Management.
A gauge tracking 126 auto-linked stocks in the mainland had climbed 1.4 per cent by the close, beating a 0.3 per cent gain on the benchmark Shanghai Composite Index, according to data from Shanghai DZH.
Kuang-Chi Technologies surged 0.88 yuan to 9.64 yuan, with overseas sales accounting for about 7 per cent of total sales for the maker of car-seat slides. Chengdu Xiling jumped 1.49 yuan to 16.34 yuan and Aotecar New Energy Technology, which derives 22 per cent of revenues from overseas, rallied 4.9.1 per cent to finish Wednesday at 2.35 yuan.
In Hong Kong, China Yongda added 0.2 per cent to HK$4.79 at the close.
Earlier, a report from the China Association of Automobile Manufacturers showed that vehicles sales tumbled 14 per cent from a year ago in November, as a slowdown in economic growth weighed on consumer spending.