Volkswagen scandal splits Asia’s auto stocks – CNBC

Posted: Thursday, September 24, 2015

Volkswagen‘s emissions cheating scandal has divided investors in Asia’s auto stocks, providing a fillip for South Korean carmakers that hope to get an edge, while depressing Japan’s with worries about heavier testing.


South Korea’s Hyundai Motor closed up 0.6 percent on Thursday, while its sister firm Kia Motors erased early gains to finish flat.


Shares of both companies powered up more than 3 percent on Tuesday, when the German carmaker acknowledged rigging vehicle emission tests in the United States, before the South Korean carmakers succumbed to a region-wide selloff on Wednesday that was triggered by a grim reading of China’s all-important manufacturing sector.


Analysts reckon, however, that Volkswagen’s scandal could be a longer-term boon for South Korea’s carmakers.


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“For the first eight months of 2015, Hyundai Motor and Kia’s combined market share in the U.S. was 8.1 percent, versus 3.8 percent for Volkswagen. Although Hyundai Motor doesn’t have much of a diesel line-up in the U.S., the news could result in market share gains for both Hyundai and Kia,” Sung Yop Chung, analyst at Daiwa Capital Markets, wrote in a Tuesday note.


“Furthermore, Volkswagen also has a competitive advantage in emerging markets. If the scandal becomes more global, it could provide tailwinds for [South Korean carmakers],” the Seoul-based analyst added.


Logistics company Hyundai Glovis and automotive parts supplier Hyundai Mobis closed up 4.3 and 0.9 percent respectively, outpacing the broader Kospi index which ticked up 0.1 percent on Thursday.


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By contrast, auto-related names in Japan were crushed amid intensified scrutiny worldwide on the industry’s environmental testing standards. Markets in Tokyo were trading for the first day following a five-day long weekend.


Nissan and Honda tanked more than 2 percent each, while Suzuki Motor, Mitsubishi Motors and Mazda Motor tumbled between 4.1 and 6.8 percent. Toyota Motor – a direct competitor of Volkswagen in Japan – got off comparatively lightly with a 1.9 percent fall.


The fallout from the scandal also left Japanese manufacturers of diesel particulate filters – Ibiden and NGK Insulators – reeling on Thursday. The stocks plummeted 7.8 and 7 percent respectively.


“The major selloff in automakers worldwide over the news around Volkswagen’s emissions scandal did not bode well for the reopening of the Japanese markets,” IG’s market analyst Angus Nicholson wrote in a note.


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