Investment mogul Warren Buffett is more comfortable with his group Berkshire Hathaway deploying capital in Japan than Taiwan due to growing tensions between China and the United States.
Speaking at Berkshire’s annual meeting on Saturday, the billionaire investor contrasted the group’s recently increased investments in five Japanese trading houses with its recent U-turn on a multi-billion dollar investment in chipmaker Taiwan Semiconductor Manufacturing Corp (TSMC).
“It’s a marvelous company,” Buffett said, referring to TSMC. But “I would feel better about capital that we’ve got deployed in Japan than in Taiwan…. That’s the reality.”
Also on AF: Taiwan Invasion ‘Could Wipe Off up to $1 Trillion Per Year’
Buffett’s Berkshire invested more than $4 billion in TSMC last year, only to sell most of it within three months. The decision came on the heels of a spike in tensions between Washington and Beijing, and concern among investors that China might invade Taiwan.
US ‘being stupid’ on China
Meanwhile, Buffett’s longtime business partner and Berkshire vice president Charlie Munger took a different view at investor summit.
Munger pointed to Apple’s success in using China as a major supplier, saying that has been good for both the company and the country.
“I think we’re equally guilty of being stupid,” Munger said, referring to the US and China.
“If there’s one thing we should do it’s get along with China and we should have a lot of free trade with China, in our mutual interest,” he said.
Japan investments a ‘pleasant surprise’
Berkshire revealed last month it had increased its stakes in Itochu, Marubeni, Mitsubishi, Mitsui & Co and Sumitomo to 7.4%. Buffett has said Berkshire might buy more.
The investment group had first disclosed owning 5% stakes in each, in August 2020, with investments totalling more than $6 billion.
Berkshire then reported increasing the stakes to more than 6% in November.
Buffett said the investment reflected the Japanese firms’ similarities to his own conglomerate Berkshire Hathaway.
“The Japanese thing was simple,” Buffett said. “There were five very very substantial companies, understandable companies” paying decent dividends and repurchasing their shares, and where Berkshire could manage the currency risk by selling yen-denominated debt to finance the sale, he added.
“They’re doing intelligent things, and they’re sizable, so we just started buying them,” and have been “more than pleasantly surprised” at their progress, he said.
Berkshire does not pay a dividend.
- Reuters, with additional editing by Vishakha Saxena
Also read:
China Preparing for War, Taiwan Foreign Minister Tells CNN
Taiwan ‘Should Destroy TSMC’ If China Invades: US Strategists
China’s Taiwan Threats Prompt Funds Strategy Rethink
China Tensions a Factor in Berkshire TSMC Stake Sale: Buffett
TSMC Dumped by Several Funds Other Than Buffett’s Berkshire
