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Warren Buffett’s trip is a ‘stamp of approval’ for investing in Japan




  • “For Japanese institutional investors, this is now really the stamp of approval that Japan can deliver superior returns,” Monex Group’s Jesper Koll told CNBC’s “Street Signs Asia.”
  • He added that Buffett will benefit from the upper hand that the top Japanese trading houses have.

Warren Buffett, chairman and CEO of Berkshire Hathaway Inc., in Fukushima Prefecture, Japan, Monday, Nov. 21, 2011.

Bloomberg | Bloomberg | Getty Images

Berkshire Hathaway’s Warren Buffett is in Japan and recently revealed he increased his holdings in the country’s top trading house, saying he was “confused” by the prospect of buying them two years ago.

The five companies – Mitsubishi Corp., Mitsui & Co., Itochu Corp., Marubeni Corp., Sumitomo Corp. then two consecutive days of gains as Buffett confirmed that he was adding about another percentage point to his holdings. Berkshire Hathaway’s stake in all five trading houses is now 7.4%.

On Thursday, stocks mostly continued to trade higher for a third day, paring earlier losses after Federal Reserve minutes showed expectations of a U.S. recession as a result of the regional banking crisis. The Sumitomo share fell 0.5 percent.

Buffett’s trip is a “stamp of approval” – especially for domestic investors in Japan, according to Monex Group’s Jesper Koll.

“For Japanese institutional investors, this is now really the stamp of approval that Japan can deliver superior returns,” Koll told CNBC’s “Street Signs Asia.”

He stressed that Buffett’s trip has the potential to boost confidence among Japanese investors as the nation continues to struggle with low consumption.

“The real focus is confidence for Japanese investors, and that’s where Warren Buffett’s visit was very, very important,” Koll said. “He has the track record globally, but now he has a very positive track record in investing in Japan.”

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Household consumption in Japan increased marginally by 1.6% in February, the latest government data showed.

It also marked the first growth in consumption that the economy has seen in a fourth month, with out-of-season spending led by recreation, leisure and travel.

Private consumption is a key indicator for Japan, accounting for more than half of the country’s gross domestic product.

Monex’s Koll added that Buffett will benefit from the upper hand the trading houses have.

The trading companies, also referred to as sogo shosha, are conglomerates that import everything from energy and metals to food and textiles into Japan. They also provide services to manufacturers. The trading houses have helped grow the Japanese economy and contributed to the globalization of business.

“Any new venture, any new business that is formed, the Japanese trading houses will have superior intelligence and superior access to the deal, and that’s something that Berkshire Hathaway is going to be able to leverage in a unique antenna into the future view of Japan as well as Asia -The Pacific Ocean,” Koll said.

Earlier this week, the Bank of Japan’s new governor Kazuo Ueda reiterated his intention to maintain the central bank’s accommodative monetary policy, which provides further support to the Japanese stock market and private investors.

Ueda emphasized that the central bank’s yield curve control and negative interest rate policy will likely be maintained until the economy reaches the target of 2% inflation.



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