Buffett strikes again! Issues another 263.3 billion yen in bonds to continue increasing positions in the Japanese stock market?

Betting on the Japanese market has been Warren Buffett's most correct decision in recent years.

On April 18, it was reported that Berkshire Hathaway, a company under Warren Buffett, issued yen-denominated bonds again. According to Mizuho, one of the underwriters of this issuance, Berkshire Hathaway's yen bonds were issued in seven tranches, totaling 263.3 billion yen (approximately $1.7 billion).

This marks Berkshire's first yen bond issuance since November last year.

Goldman Sachs analyst Danny Suwanapruti pointed out in the latest report that the U.S. dollar is dominating the trend of Asian currencies. While the dollar has surged significantly, the yen recently hit a new low since 1990.

Faced with the continued depreciation of the yen, the Bank of Japan previously abolished its negative interest rate policy. However, compared to other major global financial markets, Japan remains the economy with the lowest interest rates.

Some analysts believe that Berkshire's issuance of yen bonds this time is likely aimed at locking in lower interest rates to secure financing at a lower cost.

Moreover, with U.S. inflation remaining high, the Federal Reserve has delayed its interest rate cut schedule again. Given the current market environment, Buffett's choice is undoubtedly the most correct one.

In fact, in recent years, aside from his preference for oil stocks, Buffett has also focused heavily on the Japanese stock and bond markets.

In 2019, Berkshire issued its first yen bond. As one of the largest overseas issuers of yen bonds, out of its 40 bond issuances in the past, 32 were in Japan.

According to incomplete statistics, as of this issuance, Berkshire has issued approximately $10.1 billion in yen bonds.

Kan Jian Finance believes that Buffett's large-scale issuance of yen bonds is primarily aimed at purchasing more Japanese stocks.

As early as August 2020, Buffett first announced holdings of 5% stakes in the five major trading houses: ITOCHU, Marubeni, Mitsubishi, Mitsui, and Sumitomo. Since then, Buffett has been unstoppable, continuously buying Japanese stocks.

With Buffett's support, the Japanese stock market has been on a steady rise.

In June 2023, Berkshire increased its stakes in the five major trading houses, with holdings in ITOCHU and Mitsubishi rising to 8.5%, while the others also saw varying degrees of increase.

By February this year, Buffett stated in his shareholder letter that Berkshire now holds about 9% of the shares in these five trading houses. Regarding when to sell these stakes, Buffett indicated that Berkshire plans to hold them for 10 to 20 years, suggesting that he will continue holding them in the short term.

Given Berkshire's current bond issuance, it is also possible that the company may buy shares in other Japanese companies beyond the five major trading houses.

Due to Buffett's continuous buying, confidence in the Japanese stock market has further strengthened among both international and domestic investors, with the market recently hitting a 34-year high.

Statistics show that Berkshire's profits from these five trading houses have already exceeded 2 trillion yen, or approximately $12.9 billion.

As the world's most famous investor, Buffett's investment strategy adjustments typically follow long cycles, and once an investment is made, he rarely changes course. Since his investment in Apple in 2016, this move has repeatedly rescued Berkshire's performance. It has proven to be Buffett's most successful investment in the past decade.

Kan Jian Finance believes that Buffett's decision to continue issuing yen bonds now, locking in low-interest capital before Japan enters a sustained rate-hike cycle, is undoubtedly beneficial for Berkshire's investment returns. Moreover, as his investments in Japan expand, Buffett will ultimately emerge as the long-term winner.