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Stock in the Chinese electric vehicle maker
BYD
is falling because of a trading statistic.
BYD
(ticker: 1211.Hong Kong) company stock sank almost 12% in overseas trading. Shares were down as much as 13.6% earlier in the day.
The reason feels odd, even mysterious. Bloomberg reported that a 20.49% stake in the company entered the Hong Kong stock exchanges Central Clearing and Settlement System. That is the size of the stake held by Warren Buffett’s
Berkshire Hathaway
(BRK.A,
BRK.B
)
The coincidence touched off speculation that Buffett might be selling. That has clearly spooked investors.
Berkshire and BYD didn’t immediately respond to request for comment about any sale or the trading system.
The addition of BYD shares onto the clearing system isn’tan ironclad signal that they will be sold, but it is significant. The stock —but it remains a significant move, because the stock would have to be in the system ahead of the settlement of any transaction.
There isn’t much reason to suspect a BYD sale from Berkshire. Buffett’s company has held BYD shares for years, purchasing its initial stake more than a decade ago.
It has been a profitable position for Buffett. Shares have returned about 41% a year on average for the past five years. The
S&P 500
has returned about 11.5% a year on average over the same span.
Electric vehicles have a lot to do with the success. BYD is the largest seller of new energy vehicles, China’s term for battery-electric vehicles and plug-in hybrids, in the world.
China is the world’s largest market for cars and the world’s largest market for EVs. NEV sales accounted for roughly 26% of all passenger vehicle sales in China in June.
BYD sold about 134,000 NEVs this past month. About half of BYD’s NEV sales are hybrids.
Tesla
(TSLA) holds the crown for most battery electric vehicles sold around the world.
Tesla
stock has returned about 61% a year on average over the past five years.
Tesla
,
which only sells battery-powered cars, sold roughly 565,000 vehicles in the first half of 2022. BYD sold almost 324,000 comparable vehicles.
Despite the Tuesday drop, BYD stock is up about 1% so far this year. That’s far better than most automotive stocks. Auto and auto parts companies in the
Russell 3000 Index
are down about 35% year to date on average.
Inflation, rising interest rates, and fear of a recession have sapped some investor enthusiasm for the sector.
Write to Jack Denton at [email protected]