As Buffett exits, can China win back Wall Street with own brand of his winning formula?

China is placing its faith in patient capital over rapid trades as it attempts to steer its next wave of growth. This strategy aligns with an approach that Warren Buffett has championed over six decades, as Warren Buffett announced his retirement from Berkshire Hathaway last week. The Chinese government has also embraced this value-investing philosophy, with the China Securities Regulatory Commission chairman, Wu Qing, vowing that Buffett's principles of long-term value investing will endure.

The country's mutual fund industry is moving in this direction, with regulators shifting incentives away from short-term speculation to foster longer holding periods. Bruno Sergi, a Harvard University professor specializing in development economics and emerging markets, sees this shift as more than a legacy strategy; it's a national financial priority.

Sergi points to Berkshire's exit from BYD, which turned a modest investment into a substantial profit, as evidence that "long-term value investing" works in the Chinese context.

However, Berkshire's recent decision to trim holdings in TSMC and add to Japanese trading houses has sparked questions about whether the philosophy applies solely to China. Buffett suggested geopolitical tensions played a role in the TSMC decision. This move has left foreign investors more cautious, as they weigh political risks against a limited number of new Chinese listings.

In the past two years, Chinese companies listed on US exchanges numbered between 50 and 60, compared to just two in 2024, leaving investors with limited options.

Despite these concerns, some foreign investors, like David Tepper and Stanley Druckenmiller, have continued to support Chinese stocks. Tepper increased his stake in Baidu significantly, while Druckenmiller returned to Chinese equities after a prolonged absence. Overall, QFII investor funds holding Yuan-denominated Chinese stocks surged 87% to nearly $40.6 billion in the last quarter.

As President Xi Jinping's three-day state visit approaches, analysts suggest that sentiment may improve temporarily, but only clear policy changes can truly boost capital allocation over the long term.