International News 25/07
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Warren Buffett has divested his holding in BYD to below 5%.
Berkshire Hathaway, the investment firm led by Warren Buffett, has reduced its holding in China's largest electric vehicle manufacturer, BYD, to below 5%. Berkshire's holding of BYD's issued H shares now represents 4.94% of the total, down from 5.06%. This may be the final occasion on which Berkshire will sell a stake in BYD, as Hong Kong regulations require the disclosure of sales when the shareholding falls below 5%. Berkshire made its initial investment in BYD in 2008, acquiring a 10% stake for $230 million. The company initiated the sale of BYD shares in August 2022, following a significant increase in the share price, which reached a record high two months later. Charlie Munger, the late vice chairman of Berkshire, played a pivotal role in the initial investment in BYD. BYD, founded in 1995 as a rechargeable battery manufacturer, has established itself as a formidable competitor to Tesla, with its electric vehicle sales approaching those of Tesla in the second quarter of this year.
China's Central Bank Rate Cut, a New Boost for the Economy.
The People's Bank of China (PBOC) has taken the markets by surprise by cutting its key short-term and long-term interest rates, thereby indicating its intention to boost economic growth. The rate cut follows the release of second quarter economic data that was weaker than expected, ongoing efforts to achieve growth targets, and concerns about deflation, a property crisis, debt, and weak consumer and business sentiment. The current trade tensions and concerns about the dominance of Chinese exports further highlight the need for growth stimulation. The PBOC's decision to cut rates is seen as an unexpected move, likely a response to the sharp slowdown in growth momentum. Furthermore, the PBOC has enhanced the open market operation mechanism in addition to reducing the seven-day reverse repo rate. China also reduced its benchmark lending rate by the same amount shortly after the rate cut.