Why is Warren Buffett bullish on Japanese stocks?

Ace investor Warren Buffett has expanded its investments in Japan's largest trading companies. The significant upward trend of Japan’s stock market, reaching its highest levels in several years, could be the main catalyst for the investment. 

On June 20, Berkshire Hathaway, Warren Buffett’s investment firm disclosed a higher ownership stake in Japanese firms -  Itochu, Marubeni, Mitsubishi Corp, Mitsui & Co, and Sumitomo. The holdings are now averaging over 8.5%.

A point to note is that these acquisitions were initially announced in 2020 and Berkshire mentioned a potential stake of 9.9% spread across these companies. 

Warren Buffett: Why the interest in Japanese shares?

Japan’s benchmark stock index - Nikkei 225 - has risen about 30% so far this year, touching its record high in June, compared to the 37% rise in the Nasdaq 100. 

Furthermore, the implementation of lenient monetary policies has led to a decline in the value of the yen, resulting in a surge of foreign investments in Japan's domestic market. According to the Tokyo Stock Exchange (TSE) data, there has been a substantial rise in the level of investment by foreign individuals in Japan's equities market, based on media reports. 

Japan’s stock indexed and its currency is also considered to be amongst the safest investment avenues out there due to the stable economy of the country. Japan’s prospects have drawn attention to the country’s improving economic conditions and shareholder-friendly corporate governance reforms. 

Berkshire Hathaway: Historic share price performance

(Data as on June 20, 2023)

This is not investment advice. Investments in the securities market are subject to market risk, read all the related documents carefully before investing. Past performance is not indicative of future returns.