Warren Buffett's bond sales signal he's preparing to pick up Japanese stocks

By Louis Goss

Warren Buffet is increasingly showing signs he is set to make a major investment in Japanese stocks by picking up shares in Japan's top banks and shipping companies, analysts have said.

The Oracle of Omaha's investment firm may be preparing to raise cash to invest in Japanese stocks through a series of yen-denominated bond sales.

Berkshire Hathaway in April launched a major -Yen263.3 billion ($1.71 billion) sale of yen-denominated bonds in what marked the investment firm's largest yen-denominated bond sale since 2019, Bloomberg reported.

The Omaha, Nebraska-headquartered firm has previously used yen-denominated bond sales to fund investments in Japanese equities, according to Warren Buffett's annual letter to shareholders from February.

In 2020, Berkshire Hathaway (BRK.B) (BRK.A) built major stakes in Japan's top five trading houses - Itochu (JP:8001), Marubeni (JP:8002), Mitsubishi (JP:8058), Mitsui (JP:8031)and Sumitomo (JP:8053).

The investment firm later increased its stakes in those same conglomerates, in investments that subsequently saw Berkshire Hathaway become Sumitomo's top shareholder.

Analysts are now expecting Berkshire Hathaway could be preparing to pile into the Japanese stock market again, according to Bloomberg.

The analysts' heightened expectations follow reports on Tuesday that Berkshire Hathaway had hired BofA Securities Inc. and Mizuho Securities Co. to launch another bond sale, in news that helped boost shares in Japanese trading houses.

Buffett's previous investment in Japan's top trading houses helped drive up the Nikkei 225 index by boosting shares in the five highly diversified conglomerates which are known in Japan as sogo shosha.

Shares in Japanese banks and insurance companies - including Mizuho Financial Group (JP:8411) and Sumitomo Mitsui Financial Group (JP:8316) - have fallen sharply in recent months following the unwinding of the yen carry trade in August.

-Louis Goss

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10-03-24 0523ET

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