Warren Buffett's Focused Investments in Japan: The Stocks He Targets
In the aftermath of a historic earthquake on August 5, which led to the largest single-day loss on the Tokyo Stock Exchange since Black Monday in 1987, concerns about potentially falling export earnings of Japanese companies arose. However, the subsequent appreciation of the yen and unwinding of carry trades seemed to have eased some of these concerns.
The day following the crash, the Topix index rose 9.3 percent, and the Nikkei 10.2 percent, indicating a swift recovery. This positive trend continued as investment professionals, such as Kei Okamura at asset manager Neuberger Berman, expressed optimism about Japan's economy.
In a significant move, Warren Buffett's holding company, Berkshire Hathaway, has expanded its investments in Japanese companies. This expansion was first revealed in 2020, and the company now owns an average of 8% in trading houses Marubeni, Itochu, Mitsui, Sumitomo, and Mitsubishi Corp. Notably, Berkshire Hathaway increased its stake to nearly 10% in the Japanese conglomerate Marubeni.
Despite this, concerns about Marubeni and Mitsui persist, as a stronger yen could potentially trim their overseas earnings. These two companies, along with others, were among the hardest hit on 'Black Monday' in Tokyo, losing nearly a third of their value at one point.
However, there are signs of recovery in the Japanese economy. Real wage growth in June marked the first increase in 27 months, suggesting that private consumption is starting to improve. Furthermore, 60 percent of Japanese companies that have already announced their second-quarter results have revised their forecasts upwards.
To encourage more investment in the domestic stock market, the Japanese government has revised the tax-free NISA program for individuals. This move comes as Prime Minister Fumio Kishida announced his resignation as head of the ruling LDP party in Japan on August 14.
The optimistic economic outlook and tax incentives could potentially benefit Japanese small- and mid-cap stocks, which generate most of their revenue domestically. These stocks, which have not been extensively covered by Berkshire Hathaway, could present attractive investment opportunities.
The expansion of Berkshire Hathaway's investments in Japan is a significant development, and it will be interesting to see how these investments perform in the coming months. The Best of Billionaires Index by BÖRSE ONLINE will continue to monitor the positions of billionaires like Warren Buffett, Bill Gates, and others in the Japanese market.
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