Buffett sees dollar weakness, Korea stocks attractive

Berkshire Hathaway Inc's Warren Buffett said on Thursday he expected the dollar to get weaker and said that South Korea's stock market was still more attractively valued than other world markets.

Buffett, who was making a one-day trip to Korea after a visit to China, said Berkshire Hathaway continued to seek good businesses, which will get cheaper in markets if problems from the U.S. subprime mortgage crisis continues.

"We are still negative on the dollar. We bought stocks in companies that are earning their money in other currencies," he said to reporters during a visit to unlisted Korean company TaeguTech.

"In the UK for example, we bought stocks in Tesco . We are gaining foreign currency exposure that we like."

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.

SUBPRIME EFFECTS

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 added that potential investment candidates could become cheaper amid market turmoil.

"In six months, or one or two years, the problem in the subprime mortgage, problem in consumers and their buyings in the U.S. may still be there, but this does not have any impact on what we do. We are looking for good businesses, and if some bad temporary news makes a business more available, then we do not care at all."

Omaha, Nebraska-based Berkshire Hathaway owns more than 70 businesses and has some $100 billion of stock and bond investments. The company also has as a subsidiary TaeguTech, which makes cutting tools and tungsten powders.

Buffett, worth $52 billion according to Forbes magazine in March, said he was gaining foreign currency exposure that he likes by owning companies that make money in other currencies, such as the world's fourth-biggest steelmaker POSCO .

Berkshire said in March it held a 4 percent stake in POSCO as of the end of 2006, which he said on Thursday was currently the firm's only holding in a South Korean company.

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" (in the Korean market). The shares were way too cheap a couple of years ago."

South Korea's benchmark Korea Composite Stock Price Index trades at a 2006 price to earnings ratio of 17 times, compared to the Shanghai Composite Index which trades at a PE of around 45 times 2007 earnings, making it one of the cheapest in Asia.

KOSPI, which closed up 2.2 percent at 1,976.75 on Thursday, 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 the chief financial officer at POSCO Co Ltd, Lee Dong-hee, an official at the steelmaker said on Thursday.

POSCO CFO had met Charlie Munger, Berkshire's vice chairman in June in Los Angeles, according to the official.

The veteran investor, known as the "Oracle of Omaha" for his astute investments, was asked whether he had any plans to put money into South Korea's reclusive northern neighbor.

"Well, first of all, I am very flattered by the question because 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.