Warren Buffett, the billionaire American investor, said yesterday that he doubted that it was possible to find a good buy among Chinese shares because the market was “too hot” and was worthy of caution.

Last week, Mr Buffett’s Berkshire Hathaway sold its entire stake in PetroChina, which has risen 76 per cent this year to become the world’s second-biggest company by market value, netting a huge profit for the insurance and investment company.

Mr Buffett said: “It was a very easy decision to buy PetroChina. It was one third of what it was worth, maybe a quarter. I doubt in the present market I would find something like that. The market has been too hot. I will keep looking.”

At one point Berkshire had a stake of 11 per cent in PetroChina. The shares were worth $3.31 billion at the end of 2006, well above the $488 million that Berkshire had paid for them, according to Berkshire’s most recent annual report.

Mr Buffett said that he had written to Jiang Jiemin, PetroChina’s chairman, thanking him for the “terrific” job that he and his managers had done for shareholders.

Hong Kong-listed shares in mainland companies have risen 89 per cent this year, while the main Shanghai index has risen more than twofold since January and has jumped fivefold since the start of last year. Only government-approved and domestic investors can trade in Chinese shares on the mainland. The Chinese have opened 46 million trading accounts this year and the demand has pushed up valuations to the highest in the world. Some companies, such as PetroChina, are listed in Hong Kong and can be bought and sold by any investor.

Mr Buffett was attending an opening ceremony in the northeastern Chinese city of Dalian for an Israel-based toolmaker that he controls. Iscar Metalworking Companies, in which Berkshire bought an 80 per cent stake last year, owns manufacturing facilities in South Korea and China and was Berkshire’s first nonAmerican acquisition.

“We never buy stocks when we see prices soaring,” Mr Buffett said. “We buy stocks because we’re confident of the company’s growth. People should be cautious when they see prices rising.” Mr Buffett sidestepped a question about what advice he would give to Chinese stock market investors, but he was happy to restate his personal investment philosophy. He said that he was hunting for well-managed companies in sectors that he understood with an eye to investing for five, ten or twenty years. “We cannot dance in and out of businesses,” he said.

He denied that Berkshire was interested in buying shares in China Life Insurance. “There was a rumour, and that is not true. We don’t have anything against it. It just wasn’t on our radar screen.”

PetroChina set an indicative price range of between 15 and 16.7 yuan yesterday for its initial public offer of A shares in Shanghai. The range represents a discount of between 11 per cent and 20 per cent to yesterday’s HK$19.40 (18.76 yuan) close of PetroChina’s Hong Kong-listed H shares. That appears to ensure a huge rise by the A shares when they list early next month, as the A shares of dual-listed Chinese companies usually trade at a significant premium to their H shares. Fund managers have reported enormous interest in PetroChina’s offer, which is expected to draw a record amount of subscriptions from institutional and retail investors today and tomorrow. The company is expected to list in Shanghai on November 5.

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