Following Warren Buffett's announcement that he wants to own more of the stocks of three of Japan's top five trading conglomerates, their shares have recently risen to record highs. Since Mr. Buffett's investment company, Berkshire Hathaway, announced its initial purchases on his 90th birthday in 2020, Itochu, Marubeni, Mitsui, Mitsubishi, and Sumitomo Corporation have seen a significant increase in value. Since then, the price of their shares has increased from 64% to 202%.
The yen presently trades for 134 to the dollar, but investors have the chance to sell at 127 to the dollar for currency futures that mature in March of the following year. That guarantees a 5% return for a little under a year. The only expense is that the buyer must keep yen for the entire time. The benefit of hedging is essentially an added bonus for buyers who want to acquire Japanese stocks. Many economists anticipate a significant increase in Japanese rates, even if the Bank of Japan abandons its yield-curve control policy.
Big names are starting to fly over the Pacific. An activist investor, Elliott Management, has benefited from its intervention in Dai Nippon Printing. The company's stock has increased by 46% so far this year. American hedge company Citadel is reportedly reopening an office in Tokyo after a 15-year absence. The example of Mr. Buffett and other major figures of American finance might attract a little more attention after a time in which the Japanese market has subtly produced respectable returns.
It is interesting how when big names enter a market or make an announcement it instantly makes other investors and consumers act in the same way.
ReplyDeleteBuffett's announcement seemed to have a big effect on investors. It is interesting how an individual can make such a huge difference in markets.
ReplyDeleteMoney makes the world go round and whoever has the most cash holds a heavy influence on the economy. We also have seen things like this when Elon Musk would tweet things about crypto currency and the stock of Tesla.
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