Buffett favourite hits new high

THE Sage of Omaha may have a smile on his face when he surveys his stable of Asian holdings today. PetroChina, the Chinese oil and gas major in which Warren Buffett has a strategic stake, streaked to a record high in

The company's shares jumped 15 cents or 6.1% to HK$2.60 as investors toasted interim net profits of 38.62bn yuan (£3bn) for the six months to 30 June.

The earnings leap was driven by higher oil prices. Earlier the shares struck a fresh record of HK$2.65.

Buffett holds 13.35% of PetroChina's Hong Kong stocks, which represents about 10% of the company's total shares. The investing guru has expanded his holdings cautiously, buying during April when they traded at about HK$1.66.

His stakebuilding attracted intense media interest as Buffett usually sticks to developed markets. There was also the usual rash of copycat investing.

PetroChina's recent rise provoked a swathe of sell notes from brokers on PetroChina when its shares went over HK$2 at the end of May. UBS Warburg was among those that said then they were overvalued, but the stock has since continued upwards.

Buffett, like many others, reckons that despite the sometimes less-than-thorough corporate governance practices common to the region, PetroChina is a good bet. The booming Chinese economy is demanding ever-greater quantities of power as it expands at breakneck speed.

There was a spillover effect from PetroChina today for refiner China Petroleum & Chemical, whose own results at the start of the week disappointed. Its shares climbed five cents to HK$2.20, better by 2.3%. Larry Yung, China's richest man and head of China-backed conglomerate CITIC Pacific, was not as fortunate as Buffett.

CITIC shares weakened 60 cents or 3.6% to HK$15.95 after it reported a deeper-than-forecast 79% drop in first-half earnings.

Pacific Century Cyberworks, Hong Kong's main telecoms group run by Richard Li, son of tycoon Li Ka-shing, was two cents or 0.6% firmer at HK$4.52 ahead of its lifting the lid on its own interims.

The benchmark Hang Seng index was up 54.78 points or 0.5% at 10,733.33.

In Japan the market was softer as profit-takers continued to lock in gains and the Nikkei 225 Average closed down 83.77 points or 0.8% at 10,225.22. Steel plays - widely tipped for a consolidation - dropped back. JFE Holdings shed 45 cents or 1.8% to 2490, and Nippon Steel was lower by six cents or 2.7% at 218 yen.

Many tech shares went in the other direction, inspired by an overnight gain on the Nasdaq and a corresponding rise in the widely-watched Philadelphia Semiconductor index.

Chip-testing equipment maker Advantest was up 40 yen or 0.5% at 7840, and NEC gained five yen or 0.6% at 857.

Singapore shares were level ahead of a major announcement today from the government on changes to the national pension scheme. Banks, however, rose on expectations that lower pension contributions would aid their earnings. The Straits Times index was 1.09 points lower at 1593.43. Family-run United Overseas Bank gained 10 cents or 0.6% to S$13, and Oversea Chinese Banking Corporation put on 10 cents 0.9% at S$11.10.