After Berkshire Hathaway issued its yen bonds, the Japanese stock market reached a new high.
On Monday, the Nikkei 225 index reached its highest level since March 1990 and is still hovering near its peak. The index has risen more than 30% so far this year.
According to media reports, the surge in the Japanese stock market this week is due to speculation that Warren Buffett may increase his bet on the Japanese stock market.
Earlier last week, Berkshire Hathaway conducted its second yen bond issuance of the year, selling yen bonds at a lower cost. Some speculate that the legendary investment guru may invest more funds in the Japanese stock market.
This time, Berkshire Hathaway issued yen bonds with five different maturities, ranging from 3 years to 35 years, with a total value of 122 billion yen (approximately 1 billion US dollars). The spread has narrowed compared to the previous issuance.
Since the issuance of its first yen bond in 2019, Berkshire Hathaway has been one of the largest overseas issuers of yen bonds. Out of its 40 bond issuances, 32 have been in yen. As of September, Berkshire Hathaway's yen debt issuance amounted to approximately 760 million US dollars.
Warren Buffett himself is also an active investor in the Japanese stock market. In June, he announced an increase in holdings of the five major Japanese trading companies, including Mitsubishi Corporation and Itochu Corporation, driving the Japanese stock market to its highest level in 33 years.
An analyst at Daiwa Securities wrote earlier this month that Buffett may be considering Japanese banks, insurance companies, and automakers as his next investment targets.
Recent data also shows the potential of the Japanese market. According to Goldman Sachs, as of September this year, the net profit of listed companies on the Tokyo Stock Exchange's first section, excluding SoftBank, exceeded expectations by 10%.
Data from S&amp;P Global Market Intelligence shows that the estimated price-to-earnings ratio of the Tokyo Stock Price Index (Topix) is 14 times. The price-to-earnings ratio at the beginning of this year was about 12 times, but it is roughly in line with the 10-year average level, while the price-to-earnings ratio of the S&amp;P 500 index is about 19 times.
If Japanese companies continue to improve their profit margins and management levels, Buffett and other investors may be willing to stay in Japan for the long term.

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Berkshire Hathaway issued yen bonds again, sparking speculation in the market about Buffett's optimism towards the Japanese market. The Nikkei 225 index reached its highest level since 1990 this week.

Japanese stocks hit a new high again, all thanks to Buffett.