Benzinga - Shares of the Nikkei 225, the largest equity index in Japan, increased more than 1% after Berkshire Hathaway Inc (NYSE: BKR-A) CEO Warren Buffett stated in a media interview with Nikkei press that he plans to increase his exposure to Japanese trading houses.
After revealing in August 2020 it had purchased somewhat more than 5% of Japan's top five trading houses — Itochu Corp. (OTC: ITOCY), Mitsubishi Corp. (OTC: MSBHF), Mitsui & Co. (OTC: MITSY), Sumitomo Corp. (OTC: SSUMY) and Marubeni Corp. (OTC: MARUY) — Buffett expanded its interests in Japanese stocks in November.
Sogo sosha, or Japanese trading corporations, are diversified conglomerates that typically trade at low or cheap market valuations.
Buffett's favorite Japanese equities trade at single-digit future P/E ratios, giving them an appealing value proposition that has likely piqued the interest of the "Oracle of Omaha," who is now in Japan on a business trip.
Itochu CEO Masahiro Okafuji told Nikkei that he is "confident" Buffett thinks the Japanese market justifies more investment. The iShares MSCI Japan Index Fund (ARCA: EWJ) is up 4.8% year-to-date.
Market Reactions To Buffett’s Interview: Shares of the five Japanese trading houses rallied more than 2% at the close of the market session in Tokyo.
Mitsubishi Corp. (8058) gained 2%, Mitsui & Co. (8031) was up by 2.7%, Itochu Corp. (8001) by 3%, Sumitomo Corp. (8053) by 3.2% and Marubeni Corp. (8002) by 4.6%.
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