DAEGU, South Korea (Reuters) - Billionaire investor Warren Buffett said on Thursday he expected the dollar to weaken further, adding that South Korean stocks offered better value than other world markets.
Buffett, worth $52 billion according to Forbes magazine in March, said his Berkshire Hathaway (BRKa.N) company is still on the hunt for bargains as the U.S. subprime mortgage crisis plays out.
“We are still negative on the dollar. We bought stocks in companies that are earning their money in other currencies,” he told reporters during a visit to Berkshire’s Korean cutting tool maker subsidiary, TaeguTec.
Berkshire Hathaway, which owns more than 70 businesses and has some $100 billion of stock and bond investments, has a stake in only one listed South Korean company, the world’s fourth-biggest steelmaker POSCO (005490.KS). Berkshire said in March it held a 4 percent stake in POSCO as of the end of 2006.
“We are gaining foreign currency exposure that we like,” said the veteran investor, known as the “Oracle of Omaha” for his astute investments.
The U.S. currency has lost 23 percent against the South Korean won since the end of 2003, hit by accumulating current account surpluses in South Korea and a steady inflow of portfolio investment into the country’s financial markets.
International Monetary Fund Managing Director Rodrigo Rato said on Monday the U.S. currency was still overvalued and that there was room for further depreciation.
Buffett was sanguine about the impact on Berkshire’s investments arising from the subprime mortgage crisis in the United States. While he acknowledged it had been having an impact, he said potential investments may become cheaper.
“We are looking for good businesses, and if some bad temporary news makes a business more available, then we do not care at all,” said Buffett, who was on a one-day visit to South Korea after a visit to China.
When asked about South Korean stock markets, he said: “My impression is that the Korean market is modestly cheaper than other markets in the world. I think the Korean market would do better for the next 10 years,” he said.
“There is no reason there should be a ”bubble“. The shares were way too cheap a couple of years ago.”
South Korea’s benchmark Korea Composite Stock Price Index trading at a 2006 price to earnings ratio of 17 times, among the lowest in Asia. By comparison, the Shanghai Composite Index trades at a PE of around 45 times 2007 earnings.
KOSPI is up around 38 percent this year and is within sight of record highs of 2,058.87 reached earlier this month.
During his first visit to Korea, Buffett was scheduled to meet POSCO’s chief financial officer, Lee Dong-hee, an official at the steelmaker said.
Buffett said POSCO shares had been in his portfolio for three to four years. “It’s a great company and great companies are going to be worth more and more over time. We have no goal for a specific price,” he said.
But he has no plans to invest in South Korea’s reclusive northern neighbor.
“Things would have to change a whole lot before we can make investments. I‘m 77 years old and the thought that the day would come in my time -- it’s very flattering but it’s a long way off,” he said.
Additional reporting by Kang Shinhye, Yoo Choonsik and Kim Soyoung