(Reuters) – Shares of US automakers rose on Monday after a report that China considered halving its car sales tax to 5 percent to support the cooling auto industry, hit hard by the ongoing Sino-US trade war has been.
Traders work on the New York Stock Exchange (NYSE) floor in New York, USA, October 29, 2018. REUTERS / Brendan Mcdermid
Shares of General Motors Co (GM.NNo. 1, U.S. No. 1. Automakers through sales rose as much as 5 percent to $ 34.30, while those of Ford Motor Co (F.N) jumped 7 percent. The shares of the two companies have fallen by more than 20 percent this year.
"From a Chinese perspective, extending a purchase advantage could help alleviate some of the overhang in trade disputes and is likely to contribute to stock performance today," said James Albertine, an analyst at Consumer Edge Research.
The Chinese National Development and Reform Commission, the supreme regulator, has put forward a plan, but no decision has yet been made, Bloomberg said, citing people who are familiar with the matter. (Bloom.bg/2RgGRZy)
According to the report, the measure would apply to cars with engines no larger than 1.6 liters.
Reuters previously reported that the China Automobile Dealers Association (CADA) had sent documents to the country's finance and trade ministries suggesting halving the car sales tax.
The European auto stock index .SXAP also rose after the report and was scheduled for its best day in almost 4 months.
BMW (BMWG.DE), Volkswagen AG (VOWG_p.DE) and Daimler AG (DAIGn.DE) gained between 4.3 pct and 4.9 pct.
Auto parts manufacturer Aptiv Plc (APTV.N), Delphi Technologies Plc (DLPH.N.), BorgWarner (BWA.N), Visteon Corp. (VC.O) Goodyear tires & rubber Co (GT.O.) everything between 5 and 8 percent.
Regardless, Goldman Sachs Ford upgraded to "buy" and named the company's renewed product lines worldwide as well as cost savings through strategic initiatives.
Reporting by Sanjana Shivdas and Ankit Ajmera in Bengaluru