EV stocks rattled as placement wave feared

Shares of Chinese electric vehicle makers fell yesterday in Hong Kong as analysts warned of a potential wave of share sales following BYD's (1211) placement which raised more than HK$40 billion.

The declines came amid news that Didi Global is seeking fresh capital for its autonomous driving unit that could value it at about US$5 billion (HK$39 billion) as Chinese technology firms ride the wave of investor enthusiasm.

BYD shares fell nearly 7 percent to HK$339.00, the biggest decline among blue-chip stocks while Geely Automobile (0175) fell 5.7 percent to HK$16.88. Shares of other Chinese car makers also fell with XPeng (9868) sliding 3 percent, Nio (9866) losing 4.6 percent and Li Auto (2015) declining 3.2 percent.

This came after BYD raised HK$43.5 billion in Hong Kong's biggest share sale in nearly four years. The company sold 129.8 million shares at HK$335.2 each, according to terms of the deal.

Shenzhen-based BYD's offering was enlarged by 10 percent from the 118 million shares it had originally offered.

Alvin Cheung Chi-wai, associate director at Prudential Brokerage, warned that other EV makers may follow suit and place shares or issue debt to cover research and development costs.

Mike Leung Kit-man, an investment manager at Hong Kong-based brokerage Wocom Securities, said some cash-strapped automakers may seek funding amid fierce price wars but he was not excessively concerned about a share placement wave at this stage.

BYD also announced that the UAE-based Al-Futtaim family office was a key investor in the share sale, without disclosing the amount invested by the office.

Staff reporter and Bloomberg