Stocks log monthly loss on BYD sell-off, tech setback as weak China data, housing slump damage earnings

China’s manufacturing industry contracted for the second month in August amid snap lockdowns, official report shows

Buffett’s Berkshire Hathaway sold 1.33 million BYD shares for US$47 million, reducing its holdings in China’s biggest EV maker by unit sales

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An elderly looks at the electronic screen displaying the stock prices and the Hang Seng Index outside a bank in Mong Kok. Photo: Winson Wong

Published: 10:38am, 31 Aug 2022Updated: 4:44pm, 31 Aug 2022

Hong Kong stocks capped a second month of decline as sudden Covid-19 lockdowns while weak China manufacturing data and housing slump kept investors at bay. A sell-off in BYD and Kuaishou, stoked by concerns about insider selling, also weighed on the market.

The Hang Seng Index fell 1 per cent this month to 19,954.39, and was little change in Wednesday trading. The Hang Seng Tech Index advanced on Wednesday 1.1 per cent but failed to overturn a 1.3 per cent setback for the month. The Shanghai Composite Index lost 0.8 per cent.

BYD, the top-selling Chinese electric-vehicle maker, plunged 7.9 per cent to HK$242.20. Warren Buffett’s Berkshire Hathaway sold 1.33 million BYD shares for US$47 million, filing late Tuesday showed. Country Garden slid 6.4 per cent to HK$2.33 while search-engine operator Baidu lost 3.3 per cent to HK$141.50 after issuing poor report cards. Alibaba Group lost 1 per cent to HK$94.30.

“The major concern is the economy, which is not likely to pick up with the zero-Covid in place,” said Wang Zheng, chief investment officer at Jingxi Investment Management in Shanghai. “The negative impact has already been reflected in the interim results.” Buffett is taking profit and the sale will not blemish the broader new-energy sector, he added.

An index tracking China’s manufacturing industry stood at 49.4 in August versus 49 in July, the statistics bureau reported on Wednesday. Readings below 50 represent a contraction in activity, which has been the case in five of the past six months.

China’s zero-Covid policy, power shortages and the housing market crisis almost stalled growth last quarter. The Hang Seng Index has retreated 11 per cent from a high in June, and valuations have fallen to 7.6 times earnings, the cheapest among major markets after Brazil, according to Bloomberg data.