Warren Buffett pours more money into Japan’s stock market

Billionaire investor Warren Buffett’s Berkshire Hathaway (BRKA) has added to its holdings in Japan’s five biggest trading houses, likely underpinning strong momentum propelling the nation’s stock market to multi-year highs. Berkshire said Monday its stakes in Itochu (ITOCF), Marubeni (MARUY), Mitsubishi Corp, Mitsui & Co (MITSY), and Sumitomo now average more than 8.5%. It first announced the buys in 2020, and the additional purchases are in line with its plans to hold the stakes long-term and increase them to as much as 9.9%. Buffett’s investments and his optimism about Japan’s prospects have drawn attention to the country’s improving economic conditions and shareholder-friendly corporate governance reforms that have helped underpin a sparkling rally in the Nikkei (N225)share average. The market ended 1% lower Friday, and Berkshire’s announcement came after Monday’s close, but 10 weeks of consecutive gains have helped the Nikkei rise 28% this year. “The tailwinds for Japanese equities continue to multiply,” said Charu Chanana, market strategist at broker Saxo Markets in Singapore. “While it was previously hinted that Berkshire will increase its stake … the announcement has come somewhat sooner than expected and will further boost optimism on Japanese stocks.”

Berkshire’s biggest bet outside America

Berkshire said the aggregate value of the investments is the largest of any Berkshire-held public stocks outside the United States. Known as “sogo shosha,” Japanese trading houses deal in a variety of materials, products and food, often serving as intermediaries, and provide logistical support. The stocks are all up more than 30% this year, with Marubeni shares up 62%. That stock has more than tripledin price since the end of 2020. The trading firms’ regulatory filings of June 12 showed Berkshire holding 7.4% of Itochu’s stock, 8.3% of Marubeni and Mitsubishi’s stock, 8.1% of Mitsui’s stock and 8.2% of Sumitomo’s stock.