By Zhao Yidi and Kyung Bok Cho (China Daily)
Updated: 2007-10-25 11:26

Billionaire Warren Buffett (right) visits a subsidiary of his fund firm in Dalian, Northeast China's Liaoning Province. He cautioned investors against risks as China stocks more than doubled this year. [China Daily]

Billionaire Warren Buffett said investors should be "cautious" about China's stocks after the country's benchmark index more than doubled this year.

"We never buy stocks when we see prices soaring," Buffett said yesterday in Dalian, Northeast China, where he's visiting a subsidiary of his Berkshire Hathaway Inc. "We buy stocks because we're confident of the company's growth. People should be cautious when they see prices rising."

Buffett has sold shares of PetroChina Co, which has risen 76 percent this year to become the world's second-biggest company by market value.

"Buffett is right about China stocks, whose valuations are too high," said Wang Zheng, who manages the equivalent of US$500 million at the asset management unit of Everbright Securities Co in Shanghai. "It doesn't make sense any more to still play in such a market. It's about time to pull out of it."

Buffett said he was "appreciative" of PetroChina's performance and that he is doubtful he can find another stock like it. Berkshire owned more than 10 percent of PetroChina's publicly held shares as of the end of last year. It owned 3.1 percent of the publicly held shares as of September 30, according to disclosures. The company has sold all of its holding, Buffett said in a Fox Business Network interview last week.

Buffett, 77 and chairman of Omaha, Nebraska-based Berkshire Hathaway, transformed the company over four decades from a failing textile maker into a US$200 billion investment and holding company with businesses ranging from icecream and underwear to insurance and corporate-jet leasing. His investments are followed worldwide. The company's stock has risen 16 percent this year.

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