4 Min Read
(Adds analyst comments, CAAM's response to news report, background)
HONG KONG/BEIJING, June 24 (Reuters) - Chinese auto shares leapt in Hong Kong on Friday as investors became more positive on the sector, which had been hammered by weak sales earlier this year, after better-than-expected sales performances by some global auto makers in China.
Geely Automobile Holdings Ltd (0175.HK) surged as much as 8 percent to HK$3.09 in early afternoon trade and Guangzhou Automobile Group Co Ltd (2238.HK) jumped 5.3 percent to HK$8.98 after hitting a high of HK$9.17 in the morning. The blue chip Hang Seng Index .HSI was up 1.7 percent in early afternoon.
Many Chinese carmakers traded at their lowest in months late last week on concerns over slowing sales growth and high oil prices, but some brokers said the sell-off had been overdone.
"We are optimistic on sales outlook in the second half of the year, especially the up and coming autumn which has always been the best auto selling season of the year," said Liu Lixi, an analyst with Northeast Securities.
The gain in auto stocks was also sparked by press reports that suggested China's state planner and other agencies were seeking to change or reform purchase limits on vehicles in Beijing, brokers said.
China's top economic planner is appealing to adjust or scrap the Beijing municipal government's policy to limit new car quotas, the National Business Daily said, citing people with knowledge of the matter, including unnamed officials with the country's auto association, known as CAAM.
But Dong Yang, secretary general of CAAM told Reuters the report was not true. Officials at the National Development and Reform Commission could not be reached immediately for comment.
The Beijing city government started to impose quotas on car sales since January to tackle its ever-worsening traffic gridlock. The city accounts for about 4 percent of China's overall car sales.
The Chinese central government in early 2009 issued a raft of stimulus measures, including tax incentives for small cars, which helped China surpass the United States as the world's top auto market.
It scaled back the incentives in 2010 and scrapped them completely at the beginning of this year.
Automobile demand has been cooling down, with monthly sales in May declining for the first time in more than two years.
(Reporting by Fang Yan, Vikram Subhedar and Alison Leung; Editing by Jacqueline Wong)
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