Hong Kong stocks decline as EU tariffs slam Chinese EVs; Geely, Li Auto main drags

Hong Kong stocks saw their steepest fall in a week with EV makers Geely and Li Auto leading declines, after the European Union's new tariffs on electric cars slammed the brakes on a sector which is seeking new markets in the back drop of a bruising price war at home.

The Hang Seng Index fell 1.3 per cent to 17,799.61 on Friday, while the Tech Index weakened 1.5 per cent. The Shanghai Composite Index declined 0.3 per cent and struck a five-month low.

Geely Auto tumbled 3.1 per cent to HK$8.43, and BYD dropped as much as 1.5 per cent before clawing back losses to end flat. The European Union raised tariffs on the two companies by 19.9 and 17.4 per cent respectively, in addition to the 10 per cent duty already in place for all electric cars imported from China.

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Li Auto lost 1.9 per cent to HK$79.25, Xpeng tumbled 3 per cent to HK$30.40 and Nio dropped 0.8 per cent to HK$37.30, as additional duties, ranging from 20.8 to 37.6 per cent, came into effect beginning on Friday, which would initially last for a maximum of four months.

"The market was low key hoping the tariffs might be dialled back, but we can clearly see the EU's stance is still quite harsh," said Jason Chan, strategist at the Bank of East Asia in Hong Kong. "There's a chance that other countries, such as Canada, could step up scrutiny as well."

Friday's loss has trimmed the Hang Seng Index's gain in the holiday-shortened week to 0.5 per cent, driven mainly by mainland investors targeting high-yielding stocks. Southbound buying has reached HK$10.9 billion (US$1.4 billion) in the month through Friday, adding to the 12 months of net inflows since July last year, Stock Connect data shows.

Still, Hong Kong's market is struggling as China's economic recovery remains patchy with investor expecting the Third Plenum to deliver supportive policies later this month, Chan said.

"We don't see a strong catalyst for the market at the moment," he said. "We probably need to wait until at least mid-July, when more detailed policies come out."

Elsewhere, Robosense, a Chinese maker of sensors for self-driving cars and the first IPO out of Hong Kong this year, crashed 68 per cent to HK$16.24, its lowest after the sixth-month lock-up expired today.

In the new issue market, Shandong Jianbang New Material jumped 133 per cent from its IPO price to 43.50 yuan on its first day of trading in Shanghai.

Other Asian markets were mixed as regional investors awaited the crucial US jobs data release, which will drive expectations around the Fed's interest rate trajectory. South Korea's Kospi edged up 1.3 per cent, Australia's S&P/ASX 200 was down 0.1 per cent, and Japan's Nikkei 225 was little changed.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.

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