Warren Buffett’s Berkshire Hathaway is betting big on Japan

Berkshire Hathaway (BRKA), the American billionaire’s industrial and insurance group, announced on Sunday that it had acquired shares in five of Japan’s leading retailers. The shares are valued at approximately 5% each and have a total value of $ 6.7 billion, based on the companies’ share prices on Monday. The five companies – Itochu (ITOCF), Marubeni (MARUY), Mitsubishi (MBFJF), Mitsui (MITSY) and Sumitomo (CMTDF) – are known in Japan as “Sogo Shosha” or “General Trading Companies”. They play an important role in the country’s economy and operate in a wide variety of industries including energy, technology, and manufacturing.

“I am delighted that Berkshire Hathaway is part of the future of Japan and the five companies we have selected to invest in,” Buffett said in a statement, noting that the companies have global business partnerships. “I hope that there may be opportunities for mutual benefit in the future.”

Berkshire said it bought the stocks during the last year through regular purchases on the Tokyo Stock Exchange.

Japanese companies haven’t always welcomed FDI, and some, like New York hedge fund Third Point’s stake in Sony, are controversial. But Buffett is a household name in Japan, and books about his legendary investment style have been a staple of Japanese bookstores for years.

Company stocks rose on the news, rising between 4% and 10% in Japan. The benchmark Nikkei 225 (N225) rose by more than 1% on Monday afternoon.

Berkshire said it intends to hold the investments long term, adding that it could increase the size of its holdings up to 9.9%.

The stakes are among Berkshire’s most notable forays into Asia. It also has a huge part in it WORLD (I SHALL), the largest electric vehicle manufacturer in China.

It’s also a sign of how, according to the US dollar, Berkshire might be trying to hedge against a weak US dollar Stephen Innes, Chief Global Market Strategist at AxiCorp, a Sydney-based financial services company.

Innes pointed out that Berkshire announced earlier this month that it was getting involved in it Barrick (GOLD), a Canadian gold mining company that is one of the most valuable in the world. The price of gold has benefited from the weakness of the US dollar this year and has risen to an all-time high.

As the world continues to work towards a recovery from Covid-19, the Japanese trading houses Berkshire is now investing in will be “a hot commodity,” Innes said as they trade in resources.

“They will be the channels to boost Japan’s economic engines,” he added.

– Kaori Enjoji contributed to this report.

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