HK Stock Market Move | Lithium battery concept stocks are seeing significant declines. The battery consumption tax is about to be reinstated, and some companies have started issuing price adjustment letters to customers.

Lithium battery concept stocks have seen significant declines. As of the time of this report, Ganfeng Lithium Group (01772) has dropped by 5.23%, trading at HKD 39.16; CALB (03931) has decreased by 5.04%, trading at HKD 17.72; Contemporary Amperex Technology (03750) has fallen by 4.82%, trading at HKD 629.5; and Tianqi Lithium Corporation (09696) is down 3.25%, trading at HKD 35.16. On the news front, on July 17, the Ministry of Finance, General Administration of Customs, and State Taxation Administration officially announced the phased restoration of consumption tax on battery products, such as lithium primary batteries and lithium-ion batteries, which were previously exempted from this tax. Two-tiered tax rates have been established: from September 1, 2026, to December 31, 2026, a rate of 2% will apply, and starting January 1, 2027, the rate will increase to 4%. Amidst the adjustment of battery consumption tax policies, companies are actively promoting the cost transmission down to downstream customers, and battery manufacturers are gradually sending customers price adjustment letters. It is noteworthy that Contemporary Amperex Technology's second-quarter financial report indicated a total gross profit of only 34.22 billion yuan, with a gross profit margin of just 23.2%, nearing a 24-year low. A research report from Citibank highlighted that Contemporary Amperex Technology's second-quarter gross profit margin fell short of expectations, triggering a new wave of market concerns. As the company has just begun mass production of sodium-ion batteries, investors find it challenging to ascertain whether its profit margins will rebound in the second half of the year.