Billionaire investor Warren Buffett's conglomerate, Berkshire Hathaway (BRKA), has recently increased its investments in Japan's leading trading houses, fueling the nation's stock market to reach new multi-year highs. On Monday, Berkshire announced that its average stakes in Itochu (ITOCF), Marubeni (MARUY), Mitsubishi Corp, Mitsui & Co (MITSY), and Sumitomo now exceed 8.5%. CNN reports.
Having initially disclosed these purchases in 2020, Berkshire's additional acquisitions align with its long-term investment strategy, aiming to potentially increase the stakes to 9.9%. Buffett's optimistic outlook on Japan's prospects, along with his investments, has drawn attention to the country's improving economic conditions and the implementation of shareholder-friendly corporate governance reforms, which have been key factors in driving a remarkable rally in the Nikkei (N225) share average.
Despite a 1% decline in the market on Friday, Berkshire's announcement, made after Monday's closing, follows ten consecutive weeks of gains that have propelled the Nikkei by 28% this year. Charu Chanana, a market strategist at Saxo Markets in Singapore, noted that the news of Berkshire's increased stake has come earlier than expected, generating further optimism about Japanese stocks and amplifying the tailwinds supporting the country's equities.
Berkshire's Latest Move: A Major Bet Beyond US Borders
This recent move by Berkshire marks its largest investment in publicly traded stocks outside of the United States. The aggregate value of these investments in Japan's trading houses surpasses that of any other foreign stocks in Berkshire's portfolio.
Known as "sogo shosha," Japanese trading houses engage in various industries, including materials, products, and food, serving as intermediaries while providing logistical support. Remarkably, all the stocks mentioned have witnessed significant growth this year, with Marubeni shares surging by 62%. In fact, Marubeni's stock price has more than tripled since the end of 2020.
According to regulatory filings by the trading firms on June 12, Berkshire's holdings include 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. With Berkshire's increased presence in these trading houses, investors are keeping a close eye on the developments in Japan's stock market.
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