Main reference: Story in Sinafinance
Warren Buffett with Sinafinance reporter Duan Jiayu. Photo: Sinafinance
MAINLAND CHINA'S Sinafinance managed to land an exclusive interview with the world’s best-known investor.
Here’s what Warren Buffett had to say about investing in China, BYD Auto, and other topics of the day.
In short, the “Oracle of Omaha” is upbeat on China, he thinks the US market will continue to rise, and he isn’t getting rid of his 10% stake in Shenzhen-based hybrid automaker BYD (HK: 1211, SZA: 002594) anytime soon.
As if on cue, BYD’s A-share surged on Thursday to finish up their 10% daily limit.
At 83, Buffett still possesses the energy of a much younger man.
A busy daily schedule and eternal optimism have kept Father Time at bay.
Buffett told Sinafinance that although US stocks are at record highs, he still believes there more gas in the tank to fuel a further bull market.
Speaking with Mainland Chinese reporter Duan Jiayu at his office in the American Heartland, Buffett said he had no regrets about buying his 10% stake in BYD a few years ago, and would continue to hold onto his shares in the hybrid automaker.
Covering a range of topics, he also doubted that in the current calendar year natural gas would overtake petroleum in either volume or market value as “transporting the former is a lot more difficult and expensive.”
Speaking of his homeland’s markets, he said that even though the Nasdaq and S&P 500 are currently trading at historic heights, he still expected more upside from US stocks.
Buffett, known for his stoic patience, long-term thinking and “value investing,” said that rising markets were no more frightening than falling markets, but deteriorating value was something to worry about.
Not only was he bullish on equities, especially in the US, but he also said that stocks were still the best place to put money these days.
“I can’t tell you where the US market will be next week, or even next month. But I’m rather certain that over the long term, it will show an overall uptrend,” he said.
“I can’t tell you where the US market will be next week, or even next month. But I’m rather certain that over the long term, it will show an overall uptrend,” said Warren Buffett. Photo: IMDOn the economy, he said the apparent disconnect between Wall Street’s surge and Main Street’s less robust performance was not cause for great concern.
“I don’t think the US economy is frail. The stock market recovering faster than the overall economy is not to be unexpected at it is all a process.
“In the years following the global financial crisis in 2008, the US has done better than most other countries.”
He said the relatively loose monetary policy adopted by the Federal Reserve Board over the past three years has not only been good for Berkshire Hathaway, but good for the US economy as well.
On China
He said that compared to the US market, Chinese shares were still in a restructuring phase and were looking to regain traction to initiate another sustained upswing.
Recently, Morgan Stanley and other leading global research houses have generally agreed that China’s GDP will slow to around 7% next year, a number far lower that the double digit expansions over the past decade that Beijing has grown accustomed to.
But will this slower than expected growth in China drag down the vibrant US equities market?
Or will American stocks help put a charge in A-shares?
Buffett said that the high-flying Chinese economy of the past few years was due for a correction, and such undulations were a natural phenomenon in any economy – developed or otherwise.
Buffett's decision to stick with BYD Auto has paid off as its shares have recovered.
Source: Yahoo Finance
Despite the Shanghai Composite Index’s recent struggles and the slower GDP growth in China lately, he said he was still upbeat on the world’s second biggest economy’s market potential down the road.
Speaking of roads, he said he was in it for the long haul, at least as far as his 10% stake in hybrid automaker BYD was concerned.
“I’m not selling my BYD shares,” he said, adding that he was encouraged by the leadership of BYD’s CEO Wang Chuanfu and the direction he was taking the Shenzhen-based manufacturer in.
Buffett and his partner, Charlie Munger, were recently thanked by BYD North America President Li Kezeng who said that in BYD’s darkest days, during which its share price plummeted, sales slumped and many media outlets began writing off the company, Buffett and Munger held their position.
Their tenacity has paid off as BYD’s Hong Kong-listed shares are currently trading near 31 hkd (52-week range: 12.5 - 32.8) while its Shenzhen-listed A-shares are at 33 yuan (52-week range: 13.5 – 34.1).
See also:
BUFFETT & BLACK GOLD: Which China Shares To Benefit?
