Shares in top Chinese manufacturing companies plunged on Wednesday after Beijing announced plans to phase out ownership limits for foreign automakers, shipbuilders and aircraft firms.
The country will this year end shareholding limits for new energy vehicle firms such as those that produce electric cars, the National Development and Reform Commission (NDRC) said Tuesday.
The move will be followed by commercial vehicles in 2020 and passenger cars in 2022.
China currently restricts foreign auto firms to a maximum 50 per cent ownership of joint ventures with local companies.
China’s fifth-largest auto maker BAIC, which has a joint venture with Mercedes Benz and another with South Korea’s Hyundai, collapsed almost 13 per cent in Hong Kong, while Brilliance China Automotive shed almost nine per cent.
And Guangzhou Automobile Group (GAC), which has joint ventures with Italian-American carmaker Fiat Chrysler and Japan’s Toyota, slumped 10 per cent — the daily limit — in Shanghai before slightly recovering by the break.
It was down 8.77 per cent in Shanghai and plunged nine per cent in Hong Kong, where it is also listed.
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GAC is China’s number six car maker and it invested 1.2 billion yuan ($191 million) with a Chinese partner to develop smart new energy cars last year.
The nation’s biggest car maker SAIC Motor Corporation, partner of Volkswagen and General Motors, dropped 2.45 per cent by the break in Shanghai.
While the seventh biggest car maker, Geely, whose Chinese billionaire boss Li Shufu became the largest single shareholder of Mercedes-Benz maker Daimler in February, dived 4.46 pe rcent in Hong Kong.
Chinese electric car manufacturer BYD dropped 2.54 per cent in Shenzhen and 4.15 per cent in Hong Kong.
The liberalisation meets a long time demand of the United States and other countries seeking better access for their companies in the world’s biggest car market and one of the largest markets for air travel.
The NDRC will also lift restrictions on foreign ownership of aircraft manufacturing firms this year, including those that make large-body commercial airliners, regional jets, helicopters and drones.
The news also weighed on aircraft and equipment makers.
AVIC Aircraft Co. slipped 0.80 per cent in Shenzhen while AECC Aviation Power also lost 0.82 per cent in Shanghai.
The NDRC said the shipbuilding industry would this year scrap foreign ownership restrictions on firms designing, making and repairing vessels.
The news saw China State Shipbuilding Corp. fall 4.20 per cent in Shanghai while China Shipbuilding Industry Co. gave up 1.11 per cent.
