Berkshire Hathaway has increased its investment in Japan's top five trading houses, with holdings now averaging over 8.5%. Warren Buffett's conglomerate first disclosed its bets on Japan in August 2020, and the country's flagship Nikkei 225 stock-market index has since surged around 50%. The five Japanese companies owned by Berkshire are known as "sogo shosha" and serve as intermediaries for a wide range of products. Buffett intends to hold the stocks for the long-term and eventually up his stakes to a maximum of 9.9%.
Warren Buffett's recent investments in Japanese trading houses have led to renewed interest in Japanese stocks and currency. However, Bank of America has issued a note of caution, stating that calls to "Buy Japan" are premature. They remain bearish on the Japanese yen in 2023 due to a persistent foreign direct investment deficit and a potential rise of yen-carry trade. Bank of America suggests that buying Japan equities and currency could be a potential trade for 2024, conditional on confirmation of a virtuous inflation cycle in Japan and the government's policy to promote domestic capex and inward FDI.
Warren Buffett's Berkshire Hathaway has increased its stake in several Japanese trading houses, as the prospects for beaten-down Japanese stocks brighten. Despite a recent winning streak, the Nikkei 225 index is still down from its 52-week highs last summer and trades for about 16 times consensus earnings over the coming year, versus more than 18 times for the S&P 500 index.
Warren Buffett's recent trip to Japan and his decision to raise his stakes in the country's top trading houses is seen as a "stamp of approval" for investing in Japan, according to Monex Group's Jesper Koll. Buffett's visit has the potential to boost confidence among Japanese investors as the nation continues to grapple with low consumption. The trading houses hold an upper hand in the Japanese economy and provide superior intelligence and access to deals, which Berkshire Hathaway can leverage in the future. The Bank of Japan's accommodative monetary policy also provides further support for the Japanese equity market and retail investors.
Warren Buffett's Berkshire Hathaway has increased its stakes in Japan's five largest trading houses to 7.4% and may invest more in the country. The companies are Itochu Corp, Marubeni Corp, Mitsubishi Corp, Mitsui & Co, and Sumitomo Corp. Buffett said he was "very proud" of the investments and would meet with the trading houses to discuss their businesses. Berkshire does not invest in other Japanese companies, but Buffett said "there are always a few I'm thinking about."
Warren Buffett has gained an estimated $4.5 billion from his investments in Japanese trading houses since 2020, leading him to express interest in further investment opportunities in Japan at the right price.
Warren Buffett stated in an interview with Nikkei that he plans to increase his investments in Japanese stocks, expressing pride in his current holdings in the country's top five trading houses. Berkshire Hathaway had acquired slightly over 5% in each of the trading houses in August 2020 and increased its stakes in November.
