China Harmony Auto Holding Ltd (03836) saw its stock price plummet by 5.44% during intraday trading on Tuesday, following the company's announcement of a proposed subscription and deemed disposal of equity interest in one of its subsidiaries.

According to the announcement, iCar Group, a non-wholly owned subsidiary of China Harmony Auto, will allot and issue 9.9999% of its enlarged issued share capital. The subscription amount has been set at $40 million. The Target Company, which is incorporated in the Cayman Islands, operates in the overseas sales and after-sales services of New Energy Vehicles (NEVs) under the BYD brand.

This move appears to be part of China Harmony Auto's strategic realignment, focusing more on luxury and ultra-luxury car sales, including brands like Rolls-Royce and Bentley. However, investors seem to have reacted negatively to this development, possibly due to concerns about the potential impact on the company's overall business structure or future revenue streams. The market's response underscores the challenges faced by companies in the rapidly evolving automotive sector as they navigate strategic shifts and changing market dynamics.