BYD's Hong Kong shares drop most in 2-1/2 months on discounted share sale

** Hong Kong-listed shares of BYD Co Ltd fall 5.4% to HK$280.60, their biggest intraday percentage drop since Aug 16

** Stock hits its lowest since Oct 21, set for a fourth straight session of losses

** The third-most actively traded shares by turnover and sixth biggest percentage decliner in Hang Seng Commerce & Industry Index

** The Chinese electric vehicle maker plans sale of $1.77 bln shares for working capital, pay down debt and invest in research and development

** BYD plans sale of 50 mln new shares at HK$276 each, or 6.9% discount to stock's Friday close

** BYD Shenzhen shares fall 3.2%

** Daiwa believes the issuance will further improve BYD's capital structure and focus on R&D of new car models and battery technology, but there would be no more issuance quota for the company approved by regulator CSRC after the issuance

** The Hang Seng Commerce & Industry Index falls 2%, and Hang Seng Composite Index tracking industrials slips 1.4%

** The Hang Seng China Enterprises Index eases 1.2% and the benchmark index down 1.4%

** As of last close, BYD's Hong Kong shares up 46% this year