Tokyo: Warren Buffett is turning his focus back to Japan, with the billionaire investor telling Nikkei that he’s mulling a boost to his stock investments in the country shortly after Berkshire Hathaway kicked off a yen bond sale.
Shares of Japan’s major trading houses jumped after Buffett said he has raised his holdings in them to 7.4 per cent from about 5 per cent in 2020 and is looking to increase his exposure to the country’s stocks, according to the Nikkei report.
The 92-year-old Buffett is currently in Japan and plans to meet with different company leaders and “just have a discussion around their businesses and emphasize our support,” he told Nikkei, without naming the companies.
In the interview, Buffett compared Japan’s five large trading houses to Berkshire and said he would do business with them.
“We would love if any of the five would come to us ever and say, ‘We’re thinking of doing something very big or we’re about to buy something and we would like a partner or whatever,’” he said, according to Nikkei.
He then added that while he doesn’t have a stake in other major Japanese companies, “there are always a few I’m thinking about,” Nikkei reported.
Buffett’s interest is “a reminder that there are attractive and well-priced investment opportunities in Japan,” said Lorraine Tan, director of equity research at Morningstar Asia. “Given what we know to be his preferences, he would be looking for well-managed companies that enjoy economic moats which he thinks are undervalued.”
Officials at the company didn’t immediately respond to a request for comment on the Nikkei story.
Shares of Mitsubishi, the biggest trading house, jumped as much as 3 per cent, the most since March 1. Mitsui & Co. surged as much as 3.7 per cent, while Marubeni, Sumitomo and Itochu also edged higher. Japan’s Topix extended gains after news of the report.
Buffett’s remarks “may encourage foreign investors to invest in Japanese stocks, especially in value stocks,” Hiroshi Namioka, chief strategist at T&D Asset Management.
Foreigners have net sold Japanese stocks and futures from the Tokyo Stock Exchange for the last three weeks following the international banking crisis in March, though they remain net buyers so far this year. Over the past 12 months, the MSCI Asia Pacific excluding Japan Index has dropped 8.6 per cent, compared with a 0.8 per cent decline in the broader Topix using dollar terms.
It’s not clear how long the market boost from his remarks to Nikkei will last.
“Buffett’s investments a few years ago did not ignite the market much in the short term, other than for the stocks he chose or those much like them, but I believe that it had a moderately positive effect in the intermediate to long term regarding foreign perceptions of Japan’s market,” said John Vail, chief global strategist at Nikko Asset Management adding that this would also support domestic optimism.
Trading houses in Japan have already gained over the past year as companies such as Mitsui and Mitsubishi expanded buyback program plans in February. Company earnings have also been boosted by the higher energy prices. Shares of Japan’s largest trading company Mitsubishi are up 14 per cent in the past year, compared to the broader Topix index which is up 5.4 per cent.