The Buffetts of China Warren: Buffett has many fans in China but few true followers
The Buffetts of China
Warren Buffett has many fans in China but few true followers
from The Economist
Chinese Buffetts (Buffett-like investors) are now in trouble and face a stiff test because of its hard-driving, debt-laden, risky approaches & unstable cashflow.
The government appears at last to be serious about cleaning up financial markets.
Xi Jinping has declared that the focus of financial policy should be on limiting risks.
The banking regulators are now choking off cashflows to shadow banks.
The risk to Chinese investors:
1) political risk
– The state is closing in on those it suspects of illegality.
– 2 Chinese Buffetts are now in detention: jailed for manipulating the stockmarket & investigated for corruption.
2) financial risk
– In clamping down on debt, regulators’ targets are the debt-laden investments favoured by China’s insurance upstarts.
– Both Fosun and Anbang have had to call off foreign deals in the past year.
More Buffett-like companies are big, boring, and humble mainly state-owned insurers.
Hewing to official rules, they have been more cautious about using debt.
Benefiting from China’s growth, their performance has topped Berkshire Hathaway’s over the past decade.
