Warren Buffett reaps $1b profit on HK-listed BYD

Warren Buffett's Berkshire Hathaway Inc has realized a $1.02 billion paper profit on a 10-month-old investment in BYD Co after shares in the mainland car and battery maker quintupled.

Berkshire's MidAmerican Energy Holdings Co unit had agreed last September 26 to buy 225 million BYD shares at HK$8 each, a transaction then worth about $230 million.

The China Securities Regulatory Commission on Thursday granted approval for the transaction, which gives Berkshire a 9.89 percent stake. BYD shares closed Friday at HK$42.90, valuing Berkshire's stake at HK$9.65 billion, or about $1.25 billion.

HK and mainland shares end July on strong note

Hong Kong and mainland stocks rose on Friday, regaining their footing after Wednesday's steep sell-off, when the central bank reassured investors it would stick to a loose monetary policy and would not curb lending.

Both markets recorded another month of hefty gains in July, the seventh successive monthly gain for Shanghai and the fifth winning month for Hong Kong, fuelled by positive earnings momentum and analyst upgrades.

In the absence of a major disappointment in US economic data due next week, or in corporate earnings that will continue to trickle in through August, analysts expect the stock markets to continue their upward trajectory.

HKMA sells HK$3.875b to keep HK$ in trading band

The city's central bank, the Hong Kong Monetary Authority, on Friday afternoon injected HK$3.875 billion ($500 million) into the money market to stem an appreciating Hong Kong dollar and keep it within its fixed trading band.

The Hong Kong dollar hit the top of its trading band at 7.7500 on Friday as money continued to pour into the local stock market, dealers said.

According to Reuters data, the latest intervention will lift the aggregate balance - the sum of balances on clearing accounts maintained by banks with the HKMA - to HK$231.919 billion by August 4.

Fitch on banks' repurchase of Lehman Bros minibonds

Fitch Ratings on Friday said the proposed repurchase of Lehman Brothers minibonds by a number of Hong Kong banks is unlikely to affect their ratings.

The agency notes this would compound what will be a difficult year in any case for banks in Hong Kong, as a result of rising credit costs, constrained margins, and lower fee income due to lesser wealth management sales and brokerage earnings.

That said, the rise in credit costs to date has been quite limited and this may well remain the case as Hong Kong's economy is supported by strong current growth on the mainland, and because interest rates remain low.

Mainland, HK, SK most at risk of asset bubble: Poll

China's mainland is most at risk in Asia of forming an asset bubble after a surge in stock and property prices this year and will likely start withdrawing economic stimulus before the United States does, a Reuters poll shows.

The poll of more than 100 fund managers, strategists and economists in the Asia Pacific region, conducted between July 23 and July 30, showed that alongside the mainland, South Korea and India were likely to be the first Asian countries to raise interest rates, but that would not be until next year.

After Shanghai shares rocketed 80 percent this year, respondents on the mainland were unanimous that a bubble could emerge in the next 12 months. That puts Hong Kong at risk of forming a bubble.

Reuters

(HK Edition 08/01/2009 page2)