Berkshire Hathaway, the renowned investment firm led by billionaire Warren Buffett, has recently expanded its holdings in Japan’s top five trading houses, surpassing an impressive 8% ownership mark. This strategic move not only reinforces Berkshire’s commitment to long-term investments but also contributes to the rising tide propelling Japan’s stock market to unprecedented heights.
In 2020, Berkshire Hathaway initially disclosed its stakes in Itochu, Marubeni, Mitsubishi Corp, Mitsui & Co, and Sumitomo. The latest announcement aligns with the company’s objective of bolstering its holdings in these trading houses, potentially aiming for a substantial 9.9% ownership in the future.
Buffett’s investments in Japan have captured considerable attention, fueled by his optimistic outlook on the nation’s prospects. Moreover, these investments shed light on the improving economic conditions in Japan and the implementation of shareholder-friendly corporate governance reforms. These factors have collectively contributed to a dazzling rally in the Nikkei share average, bolstering investor confidence.
While the market experienced a 1% dip on Friday, Berkshire’s announcement arrived after the closing bell. Nonetheless, the Nikkei has witnessed a remarkable ascent, boasting ten consecutive weeks of gains and a staggering 28% rise since the beginning of the year.
Berkshire Hathaway now holds an average ownership stake of over 8.5% across these companies, making it the largest holder of public stocks outside the United States. These investments in the Japanese trading houses, known as sogo shosha, encompass a diverse range of materials, products, and food, often serving as intermediaries and providing crucial logistical support.
This year has been exceptionally fruitful for these stocks, with each of them exhibiting gains exceeding 30%. Marubeni, in particular, has witnessed an extraordinary surge, with its shares skyrocketing by an astounding 62% and more than tripling in value since the close of 2020. Following Berkshire’s announcement, there was a slight recovery in Nikkei futures, mitigating some of the losses incurred earlier.
In summary, Berkshire Hathaway’s augmentation of its holdings in Japan’s major trading houses signifies a robust endorsement of the country’s economic potential. The notable success of these investments reinforces the positive sentiment surrounding Japan’s market and underscores the promising direction of its corporate governance reforms. As Berkshire Hathaway further solidifies its position in the Japanese market, it continues to exemplify its prudent and strategic investment approach on a global scale.
