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Bloomberg
Geely Automobile Holdings Ltd, controlled by Volvo Cars owner Li Shufu, issued a profit warning that drove down its shares and those of other Chinese automakers as it sparked concern investors are underestimating the depths of the industry’s slump.
Shares of Geely, which said first-half profit plunged an estimated 40 percent, dropped as much as 7.6 percent in Hong Kong to HK$11.24, the lowest level in almost six months.
Geely said a worse-than-expected drop in sales in the Chinese market prompted the company to push for a reduction of inventory.
That triggered a broader fear that the automaker, which Sanford C Bernstein sees as a barometer for sentiment on car stocks, is foreshadowing further pain across the sector.
“It should hopefully be obvious to most investors that first half earnings will be a painful experience for most Chinese†automakers and their suppliers, Robin Zhu, an analyst at Bernstein, said.
Geely is among Chinese manufacturers hit by a stalling market after rapid growth over the past few years.