Japanese stocks surge on report of Warren Buffett interest

By Ambar Warrick

Investing.com -- Japan’s Nikkei index surged on Tuesday after a media report said that Berkshire Hathaway's (NYSE:BRKa) Warren Buffett was considering more investment in local stocks, and that he had also increased his holdings in the country’s five major trading houses.

The Nikkei 225 index jumped 1.4%, with shares of the country’s five biggest trading houses, including Marubeni Corp. (TYO:8002), Mitsubishi Corp. (TYO:8058), Mitsui & Co., Ltd. (TYO:8031), Sumitomo Corp. (TYO:8053), and Itochu Corp. (TYO:8001), up between 2% and 3%.

The Nikkei Asia newspaper reported that Buffett now holds a 7.4% stake in the five firms after increasing his stake in November 2022. Buffett had initially revealed a 5% holding in the trading houses in 2020.

Buffett said in an interview with the Asian daily that he also plans to increase his holdings in Japanese stocks, and that he was “proud” of his investment in the Japanese trading houses.

Berkshire is also considering issuing more bonds in yen, according to a separate report from the Nikkei.

Japanese stocks have somewhat outperformed a bulk of global stock markets this year, as signs of easing inflation and a leadership change in the Bank of Japan saw markets bet that the central bank will maintain its ultra-easy monetary policy in the near-term.

This is largely in contrast to most other countries, which are hiking interest rates to cope with a sharp spike in inflation.

Buffett, who is generally a value investor, tends to buy stakes in companies and hold them over a long period of time. Berkshire Hathaway had recently increased its position in iPhone maker Apple Inc (NASDAQ:AAPL) to over 8%.

The hedge fund is also no stranger to investments in Asia, having made a bumper profit on its initial investment in Chinese electric car maker BYD Co (OTC:BYDDF) Ltd (SZ:002594). Berkshire had recently trimmed a part of its stake in the firm, after logging a nearly thousand-fold profit on an investment made in 2008.

Berkshire also recently revealed a stake in e-commerce giant Alibaba Group Holding Ltd (HK:9988) (NYSE:BABA), likely positioning for a Chinese economic reopening this year.