Japan’s five largest trading houses experienced a surge in their share prices, climbing up to 8 percent, following Warren Buffett’s indication that Berkshire Hathaway might increase its already significant investments in these companies.
The first half-hour of trading in Tokyo on Tuesday saw the five companies’ stocks rise between 4 and 8 percent. Trading in Japan had been closed on the preceding Monday due to a public holiday.
Mitsubishi Corporation witnessed an approximate 8 percent increase, while shares in Mitsui, Marubeni, Sumitomo, and Itochu each rose around 5 percent.
Berkshire Hathaway disclosed in 2020 that it had taken a 5 percent stake in each of these trading houses, with a combined value exceeding $6 billion. Since that disclosure, the market value of all five companies has seen a significant increase.
The trading houses are involved in a diverse range of business activities, spanning from commodities to technology start-ups. These companies currently represent the only sector in Japan in which Berkshire has invested, despite speculation about potential expansion of its investment portfolio in the country.
This resurgence in stock prices followed a letter sent to Berkshire shareholders on Saturday. In the letter, Warren Buffett stated that Berkshire had reached an agreement with the five trading houses to relax a previous investment ceiling that capped its stake at 10 percent.
Buffett expressed in the letter that it is likely for Berkshire’s ownership in all five companies to modestly increase over time. He also indicated Berkshire’s intention to maintain its Japanese holdings for many decades, suggesting that there might be future productive collaborations with the five firms.
There has been investor speculation that Berkshire might utilize its stakes in the trading houses to engage in dealmaking activities in infrastructure and energy sectors, areas where the American company holds substantial global interests.