Warren Buffett shocked the Tokyo market by betting 6 billion US dollars on Japan's top five trading companies in August last year.
A year has passed, and his investment has paid off handsomely. Thanks to soaring commodity prices, the value of Berkshire's shares in these five companies increased by about $2 billion. The return rate is over 30%, outperforming the 21% increase in the Eastern Stock Index over the same period, and dividend earnings have not yet been included.
Although Buffett's investment in these resource-intensive companies has been successful, it has not attracted a large number of international investors to follow suit. In contrast, due to the pandemic and political uncertainty, many investors are still on the sidelines.
“The timing for Buffett's purchase was good,” said Hideaki Kuribara, an analyst at Tokyo Tokyo Bases Co. “I expect him to hold it for a long time, and these investments will be successful in the long run.”
These five trading companies --Commerce,Marubeni,Mitsubishi Corp.,Mitsui & Co., Ltd.withSumitomo Corporation——On the face of it, it doesn't seem to fit Buffett's idea of “investing in stocks you know.” However, Buffett invested just a few days after Abe announced that he would step down as prime minister, and many hoped that the Buffett brand would re-stimulate foreign interest in the Japanese market.
At the time, Japan's performance in fighting the epidemic was better than most economies, and Yoshihiro Suga soon took over as prime minister with a high approval rating.
The Japanese stock market initially rose after Buffett's capital arrived. The Nikkei index hit the 30,000 mark in February for the first time in 31 years. However, after that, the Japanese benchmark index entered a stable downward channel.
On the one hand, due to slow vaccination, there has been a surge in COVID-19 cases in Japan. On the other hand, Yoshihiro Suga's approval rating fell to an all-time low, and hosting the Tokyo Olympics didn't help him much.
Since Buffett's investment, foreign investors have been net selling Japanese stocks for most of the time. The Eastern Stock Exchange Index has risen 8.1% so far this year, behind the 21% increase in the S&P 500 Index.