Author:
Gordon Platt
COMPANY TO WATCH: PETRO CHINA/CHINA
Warren Buffett, the Oracle of Omaha, who is one of America’s most successful investors, could be sending a message about China’s red-hot stock market by cashing in most of his chips in PetroChina, which explores for oil and produces fuel products for China’s energy-hungry economy.
Could Buffett be signaling the end of the road for China’s stock market boom, with the Shanghai composite index more than doubling in value for the second year in a row? Or will any pullback in PetroChina’s share price as a result of the publicity surrounding the sale by Buffett’s Berkshire Hathaway produce a buying opportunity?
There is little doubt that China’s fast-growing and energy-inefficient economy will continue to consume huge amounts of oil, along with the massive amounts of coal it burns. But this might not be the best of times to buy a high-priced China-based stock. Former Federal Reserve chairman Alan Greenspan, for one, has warned that China’s high-flying market has all of the characteristics of a bubble in the making.
Investors who are playing with fire might not want to add a combustible fuel producer to their portfolio mix. Nevertheless, some analysts say PetroChina is still a bargain. That’s what makes a market.
Could Buffett be signaling the end of the road for China’s stock market boom, with the Shanghai composite index more than doubling in value for the second year in a row? Or will any pullback in PetroChina’s share price as a result of the publicity surrounding the sale by Buffett’s Berkshire Hathaway produce a buying opportunity?
There is little doubt that China’s fast-growing and energy-inefficient economy will continue to consume huge amounts of oil, along with the massive amounts of coal it burns. But this might not be the best of times to buy a high-priced China-based stock. Former Federal Reserve chairman Alan Greenspan, for one, has warned that China’s high-flying market has all of the characteristics of a bubble in the making.
Investors who are playing with fire might not want to add a combustible fuel producer to their portfolio mix. Nevertheless, some analysts say PetroChina is still a bargain. That’s what makes a market.
GP
