Japanese Trading House Shares Rise on Buffett’s Growing Stake

(Bloomberg) — Shares of Japan’s biggest trading houses advanced after Berkshire Hathaway Inc. increased its stake.

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Shares of Mitsubishi Corp., Marubeni Corp., Mitsui & Co., Itochu Corp. and Sumitomo Corp. climbed at least 4% as of 9:09 a.m. in Tokyo after filings to Japan’s finance ministry showed that Berkshire’s average holding across the stocks increased by just over one percentage point to about 9.3%.

Investors had been speculating over Warren Buffett’s next move since his annual letter to shareholders said that Berkshire is looking to increase ownership in Japan’s five largest trading houses “over time”.

“It’s a signal from Buffett” that it still has faith in shares of trading houses, which have been correcting since last year, said Hideyuki Ishiguro, chief strategist at Nomura Asset Management Co. “It’s also a message from him that Japanese stocks are still relatively cheap.”

A gauge of the wholesale trading sector on the Topix tumbled more than 20% since peaking last July, until the letter was released in February, as earnings at the major firms slowed on lower commodity prices. The gauge has since gained 7%, compared with 0.4% for the benchmark index through Monday.

Buffett has indicated that the trading houses themselves have agreed to “moderately” relax a previous ceiling of 10% on his stakes.

Berkshire’s ¥282 Billion Bond Fuels Japan Investment Hopes

The next focus point will be news flow relating to Berkshire’s yen bond issuance, SMBC Nikko Securities Inc. analyst Akira Morimoto wrote in a note. Berkshire in October sold its biggest-ever yen bond since its debut issuance in 2019 and has been a regular issuer in the Japanese currency. Its fundraising is being closely watched by equity-market investors because Buffett has used yen funds raised in the bond market to purchase holdings in Japanese companies.

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