HK Stock Market Move | The automobile dealers have been leading the decline. Morgan Stanley believes that domestic manufacturers have downward risks in their new car business.

Car dealers lead the decline, as of the time of writing, YONGDA AUTO (03669) dropped by 3.75%, to 1.54 Hong Kong dollars; HARMONY AUTO (03836) fell by 3.06%, to 0.95 Hong Kong dollars. On the news front, Morgan Stanley released a research report, pointing out that the commission income of mainland China's car dealerships has decreased, but profits are still on the recovery track. They have lowered profit forecasts for YONGDA AUTO and MEIDONG AUTO for the years 2025 to 2027, to reflect the situation where new car profit margins are lower than expected after the rectification of "high-interest high-commission" automotive finance products. Morgan Stanley believes that although the new car business will further deteriorate in the second half of 2025, posing downside risks to profits in 2025, they expect profits of Chinese car dealerships to bottom out in 2025 and rebound in 2026.