Abel took over Japan's five major trading companies from the "Oracle of Omaha"! The "Berkshire positioning effect" drives stock prices in the trade sector to soar.

On Thursday morning and during the afternoon trading session, the Japanese stock market saw a collective rise in the share prices of the five major trading companies led by Japan's general trading companies, following comments from Greg Abel, CEO of Berkshire Hathaway, the American insurance and investment giant. He stated that the group plans to retain its shares in Japan's five major trading companies for decades, and may even increase its holdings. On Thursday, Japans general trading firms became one of the sectors with the largest gains in the Tokyo Stock Exchange Index. Mitsubishi Corp. saw its stock price surge by as much as 4.5%, reaching its highest level since May; shares of Sumitomo, Mitsui & Co Ltd, Itochu Corp, and Marubeni also rose by more than 3%. Berkshire Hathaway, led by the Oracle of Omaha Warren Buffett, has held approximately 10% of each of these companies for over six years. Berkshires deepening investment in Japan has been given a long-term capital endorsement by its large kabushiki kaisha (corporations). Abel, who officially took over as CEO from Berkshire veteran Warren Buffett in January of this year, stated in an interview with the American Consumer News and Business Channel on Wednesday that Berkshire's holdings in these large trading companies are a "long-term investment" with plans to hold them for decades. Since Berkshire disclosed its stake in Japans five major trading companies in 2020, the stock prices of these Japanese firms have benefited from their connection with Buffetts investment strategy. According to financial market analyst Takuma Ikemoto from Tokai Tokyo Intelligence Laboratory, Abel's reaffirmation of trust "may rekindle investors' interest in buying Japanese general trading companies." The Tokyo Composite Wholesale Trade Index, where the five major trading companies are listed, has risen approximately 23% this year to date, slightly outperforming the overall increase of about 20% in the Tokyo Stock Exchange Index. These general trading companies have a vast business footprint covering essential consumer goods, energy, and infrastructure resources, as well as extensive international trading and import-export operations, resulting in significant overseas financial market investment returns. Therefore, they are sensitive to fluctuations in the yen exchange rate and commodity prices. In recent months, geopolitical conflicts in the Middle East have driven up raw material prices, benefitting these companies. Mitsubishi Corp., Mitsui & Co, Itochu Corp., Sumitomo Corp., and Marubeni all possess extensive international trading and import-export operations and are global investment operating groups that broadly cover energy, metals, grains, machinery, chemicals, consumer goods, and infrastructure. Their major profits are increasingly derived from overseas assets, domestic trade, project rights, and supply chain operations rather than relying solely on commodity exports as they did in years past. In March, Berkshire also announced a strategic investment of approximately 2.5% in the well-known Japanese insurance company Tokio Marine Holdings Inc. and expressed plans to actively collaborate with the company on global large-scale trade and utilities transactions. Tokio Marine Holdings Inc. saw a rise of 3.2% on Thursday. In another interview with the Nikkei, Abel mentioned that Berkshires large investment group may even increase its stakes in these companies and that these trade giants had proposed specific plans for long-term joint investment. Since Berkshire Hathaway disclosed its holdings in 2020, the stock prices of these Japanese companies have continued to benefit from their association with Buffett. Berkshire leverages low-interest yen liabilities to invest in the five major trading companies, betting on resources, cash flow, and governance dividends. Berkshire's investment in Japan's five major general trading companies is not a short-term pursuit of commodity prices, but rather a long-term capital allocation combining value investing, low-cost financing, and cross-border industrial synergy. Berkshire began buying Itochu, Marubeni, Mitsubishi Corp., Mitsui & Co, and Sumitomo Corp. as early as July 2019 and publicly disclosed these holdings in 2020. For investors, the bullish logic surrounding the five major trading companies has shifted from being based merely on commodity cycles to a multi-faceted pricing framework of "global asset portfolio + governance dividends + shareholder returns + Berkshire's permanent capital." At that time, Buffett believed that the five major trading companies had a diversified holding structure similar to Berkshires, with an initially low entry valuation, and exhibited prudent capital allocation, consistent dividends, reasonable buybacks, and relatively restrained executive compensation. This investment also uses a unique Berkshire strategy of matching yen assets yen liabilities: as of the end of 2024, the cumulative cost of holding the five major trading companies is expected to be $13.8 billion, with a market value of $23.5 billion; it is projected to contribute about $812 million in dividends in 2025, while the annual interest cost of the yen debt issued by Berkshire will only be about $135 million. The core of this strategy is not merely low-interest arbitrage but rather the use of yen financing to reduce exchange rate mismatches, generating substantial positive interest spreads while sharing in the compound returns created by long-term improvements in corporate governance in Japan, rising resource prices, global infrastructure investments, and enhanced shareholder returns. Berkshires issuance of yen-denominated debt provides financing for investments in Japan and forms a natural currency hedge with yen assets + yen liabilities. The positive aspect of this model is that it significantly mitigates the impact of yen depreciation on dollar-denominated returns; it takes advantage of Japan's relatively low financing costs; it covers bond interest with trading company dividends while earning a positive interest spread; and it allows for the long-term retention of the compound returns from the rise in the stock prices of the five major trading companies, as well as from dividends and buybacks. Essentially, it can be characterized as a strategy of not overly betting on the yen exchange rate, with a focus on earning corporate cash flows and capital appreciation. Abel explicitly stated that he intends to hold these shares for decades, effectively eliminating market concerns about Berkshire potentially withdrawing from its Japan investments after Buffetts retirement due to a "successor discount." At the same time, Berkshire has also taken a strategic stake of about 2.5% in Tokio Marine Holdings Inc., planning collaborations in reinsurance, global investments, and mergers and acquisitions, which suggests that its strategy in Japan is evolving from passive holdings to industrial synergy.