FAW surges on pro­cure­ment report

The Pak Banker - - 6BUSINESS -

FAW Car Co. jumped the most in more than four years in Shen­zhen trad­ing on spec­u­la­tion the Chi­nese au­tomaker will ben­e­fit from in­creased government pur­chases of domestic ve­hi­cles.

FAW surged by the 10 per­cent daily limit as of 11:13 a.m. lo­cal time, poised for the big­gest gain since Nov. 19, 2008, to 8.34 yuan. SAIC Mo­tor Corp., the largest au­tomaker, ad­vanced 3.4 per­cent to 15.40 yuan. Beiqi Fo­ton Mo­tor Co. added 3.3 per­cent to 6.63 yuan. The Shang­hai Com­pos­ite In­dex (SHCOMP) rose 1.8 per­cent, while the Shen­zhen Com­pos­ite In­dex gained 2 per­cent.

Over 10 Chi­nese prov­inces and cen­tral gov­er­ment de­part­ments have pro­cured “large batches” of China FAW Group Corp.’s Red Flag H7 cars, the of­fi­cial Xin­hua News Agency re­ported yes­ter­day, cit­ing Xu Xianping, its gen­eral man­ager. China should or­der for­eign au­tomak­ers to con­trib­ute more to de­velop lo­cal brands and limit those whose sole aim is to win more sales, FAW Group, par­ent of FAW Car, said March 5.

“The news of the government’s plan to pur­chase more do­mes­ti­cally made Red Flag cars is boost­ing au­tomak­ers,” said Wang Zheng, Shang­hai-based chief in­vest­ment of­fi­cer at Jingxi In­vest­ment Man­age­ment Co., which man­ages $120 mil­lion. “Domestic car mak­ers are go­ing to ben­e­fit from government pro­cure­ment. To­day’s rally is also a re-rat­ing of in­vestors’ pes­simistic view about auto sales out­looks. Things are ac­tu­ally not as bad as they ex­pected.”

Chi­nese au­tomak­ers have been urg­ing the government to take more steps to pro­tect home­grown com­pa­nies, which are fac­ing in­ten­si­fy­ing com­pe­ti­tion from for­eign man­u­fac­tur­ers ex­pand­ing in the world’s largest ve­hi­cle mar­ket. Com­pe­ti­tion for mar­ket share is poised to in­ten­sify as for­eign au­tomak­ers led by Gen­eral Mo­tors Co. (GM) and Volk­swa­gen AG step up their push into smaller cities tra­di­tion­ally dom­i­nated by lo­cal brands.

Whole­sale de­liv­er­ies may gain 7 per­cent this year to 20.65 mil­lion units, led by de­mand for pas­sen­ger ve­hi­cles, the state­backed China As­so­ci­a­tion of Au­to­mo­bile Man­u­fac­tur­ers said in a state­ment in Bei­jing on Jan. 11.

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