Volvo’s parent Geely dives after profit slowdown is announced image

Geely Automobile Holdings Ltd., led by Chinese billionaire Li Shufu and the parent company of Sweden’s Volvo Cars, had a rough time on the Hong Kong stock exchange.

The company’s shares took a steep fall after the company forecasted its full-year net income could plunge as much as 50% due to the crumbling Russian currency and the continued slump in demand for the company’s vehicles. The automaker became the biggest loser in MSCI Asia Pacific Index after it lost as much as 22% of the shares value, trading at HK$2.50 this morning in Hong Kong. Geely commented in a statement to the Hong Kong stock exchange yesterday that an unseen loss would be accounted because of the ruble’s depreciation affecting the foreign-exchange operations in Russia. The company further disclosed that for the first eleven months of the year, the company’s deliveries fell 26%, as the export markets tumbled by 49%.

Max Warburton, a Singapore-based analyst at Sanford C. Bernstein & Co. says the “company has fundamental weaknesses in brand, product, and distribution,” and he decided to put an underperform rating on the stock. The analyst believes Geely is not going to be able to quickly recuperate its losses, while the cooperation between the Chinese carmaker and its Swedish subsidiary Volvo is still considered below expectations.

Via Bloomberg