Geely rises most in two weeks on Daiwa outlook

Geely Automobile Holdings Ltd, whose parent owns Swedish automaker Volvo Car Corp, rose by the most in almost two weeks in Hong Kong trading after Daiwa Capital Markets predicted a “double-digit” gain in China vehicle sales.

The Zhejiang-based carmaker climbed as much as 8.7 per cent, the biggest intraday increase since January 20, and was 5.9 per cent higher at HK$2.32 as of the midday trading break in Hong Kong. Great Wall Motor Co, a Chinese maker of maker of sports utilities vehicles and pickup trucks, rose 2.8 per cent.

China’s passenger car sales will return to double-digit growth in the second quarter after a slowdown last month, Jeff Chung, analyst at Daiwa, wrote in a note to investors yesterday. The carmaker’s sales outside China more than doubled in 2010 from 2009, according to data compiled by Bloomberg.

“We expect further outperformance due to strong sales volume growth in 2012,” Chung wrote. “Strong joint-venture brands will penetrate further into the Chinese domestic market, while quality domestic names will diversify and tap into the emerging markets.”

Geely’s sales outside its home country rose to 1.6 billion yuan (HK$254 million) in 2010 from 706m yuan a year earlier, while in China they climbed to 18.5bn yuan from 13bn yuan in 2009, according to data compiled by Bloomberg.

The shares have jumped 36 per cent this year, compared with a 12 per cent gain in the benchmark Hang Seng Index.

Vehicle sales in China may rise 10 per cent this year, according to the China Association of Automobile Manufacturers.