Credit：Visual China

“The Chinese economy has better future prospects over the next 20 years than almost any other big economy,” Munger said in his first longform podcast interview. The legendary billionaire investor further noted the leading companies of China are stronger and better than practically any other leading companies anywhere, and they're available at a much cheaper price. Given such position in China, Munger said he is willing to hold about 18% China risk in his portfolio.

As a longtime China bull, Munger has expressed his confidence in the world’s second largest economy earlier this year. You can buy better, stronger companies at a cheaper valuation in China than you can in the United States, and that’s why Berkshire is investing in China, Munger said at the Daily Journal Corporation’s annual shareholder meeting in March. Less than two month later, Munger and his business partner Buffett called for U.S. and China to settle their differences at Berkshire Hathaway's annual meeting. Munger blasted rising tensions as “stupid, stupid, stupid”, and stressing “if there is one thing we should do is get along with China, and have lots of free trade with China.”  China and India has organic growth and stocks prices in these Asian countries are relatively undervalued, Munger said in an interview in September. “That is also why we are there,” the 99-year old investor said.

Munger, who spearheaded Berkshire's investment in BYD Co, also reiterated his optimism in outlook of the Chinese electric vehicle (EV) heavyweight at his podcast with Acquired a week ago. Munger called BYD a “miracle” and highly praised BYD founder, chairman and CEO Wang Chuanfu. He said Wang is the one “I’ve never seen anybody like that and he could do anything”.  He believed Wang is a natural engineer and a get-it-done type production executive, which allow him to solve all his problems on EVs. Comparing to Tesla and its CEO Elon Musk, Wang is even better at making things, said Munger, adding that Wang is a fanatic that knows how to actually make things with his hands if he has to.

Munger’s remark came as Berkshire just disclosed it sold 820,500 Hong Kong-listed BYD shares at an average price of HK$245.86 apiece (US$31.42) on October 25. Following the sale, Berkshire’s stake in the Chinese EV company was down from 8.05% to 7.98%, representing sales of HK$201.73 million worth of shares. That is Berkshire’s thirteenth offloading in Hong Kong made public since August 2022, suggesting it has cashed out a total of over HK$6.6 billion by sales of approximate 138 million shares. The investment company disclosed on August 24 2022 about sales of 1.33 million shares, the first stake reduction since acquiring 225 million BYD shares for HK$8.00 each in September, 2008. The holding has been trimmed by around 60% since first sale that reduced Berkshire’s holding in BYD to 19.97%.

BYD posted late October another quarterly record. The Shenzhen-based company generated RMB162.15 billion in the quarter ended September 30, rising 38.49% from a year ago, and increased net income 82.16% year-over-year (YoY) to RMB10.41 billion that quarter. That is BYD’s first time to rake more than RMB10 billion in a quarter. The net income in the third quarter surged 42.4% from the previous record set in the last quarter of 2022.

More impressively, BYD’s gross profit margin in the third quarter edged up 1.07 percentage points YoY to 19.79%, widening its gap between Tesla. The U.S. EV giant reported a gross margin of 17.9% that quarter, falling from 25.1% a year earlier, when it had not yet begun the price cuts. This is the second straight quarter that Tesla was overtaken by BYD in terms of margin.

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