Focus China: from Warren Buffett's moves on the property market to the hunger for offshore investment

Financial markets/economy

Posted by MoneyController on 18.06.2024

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Updates from China: from Warren Buffett's small move in his portfolio to investors' needs to the current situation in the real estate market.

Buffett and BYD holdings

Warren Buffett slightly reduced his portfolio's (Berkshire Hathaway's) exposure to the automobile company BYD: the stake dropped from 7 per cent to 6.9 per cent, i.e. a divestment of just under USD 40 million. BYD has become a leader in the field of electric car production: suffice it to say, as Yun Li writes on 'CNBC', that BYD has overtaken Tesla as the largest electric car manufacturer. The Chinese company had been included in Berkshire Hathaway's portfolio mainly due to the will of former vice-president Charlie Munger.

The need for foreign exposure of the wealthy Chinese

In the meantime, it is interesting what is pointed out by Reuters, in an article by Xie Yu: the demand for investment in Hong Kong by wealthy Chinese is growing, with the aim of protecting their wealth. As HSBC's head of wealth and personal banking in Hong Kong, Maggie Ng, explains to Yu, there are 45 million wealthy Chinese clients who want international exposure for their investments and protection in addition to education.

Beijing government measures mainly help real estate in big cities

Also in Reuters, an article by Liangping Gao and Marius Zaharia refers to the Chinese real estate market. In particular, the support measures launched by Beijing seem to be effective mainly in large cities, while they are less so in smaller centres. On the one hand, the Chinese government has further reduced the minimum financing costs for buying a house. On the other hand, it has made it possible for local authorities to purchase houses for use in social housing projects.

The structural and long-term problem of smaller cities

The situation in the Chinese real estate market, although improving in cities such as Beijing and Shanghai, is still critical: as Liangping Gao and Marius Zaharia, Zhang Zhiwei, chief economist at Pinpoint Asset Management, report in their article, the problem of oversupply of houses in China's small cities is a long-term structural problem that is currently difficult to solve.

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