Warren Buffett, chairman and CEO of Berkshire Hathaway Inc. in Fukushima Prefecture, Japan, Monday, November 21, 2011.
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Berkshire HathawayWarren Buffett is in Japan and recently revealed he raised his stake in the country’s top department shops, saying he was “surprised” by the chance to purchase them two years ago.
Five firms – Mitsubishi Corp., Mitsui & Co., Itochu Corp., Marubeni Corp., Sumitomo Corp. posted two consecutive days of gains as Buffett confirmed he had added roughly one other percentage point to his holdings. Berkshire Hathaway’s stake in all five department shops now stands at 7.4%.
Stocks continued their gains for a third day on Thursday, recovering from earlier losses after Federal Reserve minutes showed expectations of a US recession in the wake of a regional banking crisis. Sumitomo shares fell 0.5%.
In accordance with Monex Group’s Jesper Koll, Buffett’s trip is a “seal of approval” – especially for domestic investors in Japan.
“For Japanese institutional investors, this is now a real sign of approval that Japan can deliver higher returns,” Koll told CNBC’s “Street Signs Asia.”
He stressed that Buffett’s trip could boost confidence amongst Japanese investors because the nation continues to struggle with low consumption.
“The true goal is the trust of Japanese investors, and that is where Warren Buffett’s visit was very, very necessary,” Koll said. “He has a track record all over the world, but now he has a very positive track record of investing in Japan.”
Household spending in Japan it rose barely by 1.6% in February, in accordance with the newest government data.
It also marked the economy’s first increase in consumption in 4 months, with spending outside seasonal aspects led by recreation, leisure and travel.
Private consumption is a key indicator for Japan, accounting for greater than half of the country’s gross domestic product.
“Unique Antenna”
Monex’s Koll added that Buffett would profit from the department store advantage.
Trading firms, also known as sogo shosha, are conglomerates that import all the things from energy and metals to food and textiles to Japan. Additionally they provide services to producers. Shops helped develop the Japanese economy and contributed to the globalization of its activities.
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“Every recent enterprise, every recent enterprise that is created, Japanese department shops can have higher intelligence and higher access to deals, and this is something that Berkshire Hathaway will have the ability to make use of in a unique antenna for a future vision in Japan in addition to Asia and Pacific,” said Koll.
Earlier this week, the brand new governor of the Bank of Japan, Kazuo Ueda, reiterated his intention to keep up the central bank’s accommodative monetary policy, which provides continued support for Japan’s stock market and retail investors.
Ueda stressed that the central bank’s yield curve control and negative rate of interest policy will likely be maintained until the economy reaches its 2% inflation goal.