Buffett’s Berkshire Wagers $6 Billion on Japan Trading Firms

Buffett’s Berkshire Wagers $6 Billion on Japan Trading Firms

(Bloomberg) — Warren Buffett’s Berkshire Hathaway Inc. bought stakes in five of Japan’s biggest trading companies, adding to the billionaire investor’s wager on the commodities sector and marking one of his largest-ever forays into Asia’s second-largest economy.The investments into commodity-centric Forex news for Asia trading
Monday 31
August 2020
Some minor swings for
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weekend and through the trading session here Monday.
By Eamonn Sheridan The Indians and White Sox are discussing a deal for Mike Clevinger, which could shift the balance of power in a tight AL Central race. Warren Buffett’s $6 billion wager on Japan’s trading companies may serve as a catalyst to bring back foreign investors to the country’s value-sector heavy stock market, according to some strategists. Warren Buffett’s Berkshire Hathaway Inc. bought stakes in five of Japan’s biggest trading companies, adding to the billionaire investor’s wager on the commodities sector and marking one of his largest-ever forays into Asia’s second-largest economy.

Buffett’s Berkshire Wagers $6 Billion on Japan Trading Firms

(Bloomberg) — Warren Buffett’s Berkshire Hathaway Inc. bought stakes in five of Japan’s biggest trading companies, adding to the billionaire investor’s wager on the commodities sector and marking one of his largest-ever forays into Asia’s second-largest economy.

The investments into commodity-centric Japanese conglomerates known as “sogo shosha,” disclosed in a statement from Berkshire on Monday in Tokyo, underscore Buffett’s willingness to bet on economically sensitive companies despite the pandemic. Valued at more than $6 billion, his wager comes as global investors have pulled $43 billion from Japanese stocks this year in favor of high-flying U.S. technology shares and other companies viewed as more resilient to economic turmoil.

Berkshire said it acquired stakes of about 5% in Itochu Corp., Marubeni Corp., Mitsubishi Corp., Mitsui & Co. and Sumitomo Corp. over the past twelve months. Shares of all five companies jumped at least 4% in Tokyo trading on Monday and Japan’s benchmark Topix index rose as much as 1.9%.

While Buffett has stayed relatively cautious with his record cash hoard since Covid-19 rippled through the global economy, his Omaha, Nebraska-based conglomerate has been adding to its commodities exposure with deals including a $4 billion agreement to purchase most of Dominion Energy Inc.’s natural gas pipeline and storage assets in July.

Valuations in the sector have cheapened relative to the broader stock market in recent years, weighed down by falling commodities prices and investors’ preference for growth stocks like Amazon.com Inc. Most of the Japanese companies targeted by Berkshire trade at less than book value and offer higher dividend yields than the Topix.

“These trading companies generate strong cash flow, they pay out a lot of dividends and they have businesses that can’t be easily replicated,” said Thanh Ha Pham, an analyst at Jefferies Japan Ltd.

Buffett’s wager could help bolster sentiment toward both commodity plays and Japan. The $5 trillion economy is not only grappling with a persistent coronavirus outbreak and the postponement of the Tokyo Olympics, it’s also going through a leadership transition after Prime Minister Shinzo Abe announced his resignation for health reasons last week. Before its rally on Monday, the Topix had dropped for three straight days and underperformed regional peers in 2020.

“I am delighted to have Berkshire Hathaway participate in the future of Japan,” Buffett said in the statement. “The five major trading companies have many joint ventures throughout the world and are likely to have more of these partnerships. I hope that in the future there may be opportunities of mutual benefit.”

Buffett visited Japan after its 2011 tsunami and nuclear disaster, but he has stayed mostly quiet on investments in the country until now. Speculation that he might be eyeing Japanese stocks has been swirling since September 2019, when Berkshire completed the biggest-ever yen-denominated bond sale by a non-Japanese borrower.

Japan’s trading houses have roots dating back hundreds of years. They supply the resource-poor nation with everything from natural gas to noodles, and have spent the last few decades transforming into conglomerates that hold equity stakes in hundreds of companies around the world. While they’ve diversified into areas like textiles and machinery, they still derive much of their revenue from energy, metals and other commodities.

Berkshire said it plans to hold the Japan investments for the long term and has pledged to only own as much as 9.9% of the shares in any of the five companies, unless given specific approval by the investee firm’s board of directors.

“It’s bright news for not only the company but also Japan’s stock market,” an Itochu spokesman said. Mitsubishi said it has been contacted by Berkshire but isn’t able to provide further details. Sumitomo said it will engage in dialogue.

The investments represent a notable push abroad by Berkshire, which has long had its biggest holdings in U.S. companies including Apple Inc. and Coca-Cola Co. Buffett said in 2018 there was a good number of countries he’d be willing to invest in, although foreign firms didn’t turn to Berkshire for funding as quickly as U.S. companies might. Berkshire’s offshore wagers include China’s BYD Co. and Brazilian payment company StoneCo Ltd.

This isn’t the first time Buffett has invested in multiple competitors from one sector. Berkshire took stakes in four major U.S. airlines in 2016, though it ended up selling in 2020 as the pandemic brought most air travel to a halt. The company is also a major investor in several U.S. banks.

Buffett, who celebrated his 90th birthday on Aug. 30, has built Berkshire into a conglomerate valued at more than $521 billion, with operations ranging from insurers to industrial giants like Precision Castparts Corp. and retailers such as Fruit of the Loom. Berkshire’s equity portfolio totaled about $207 billion at the end of June, while it’s cash pile grew to a record $146.6 billion. The stock has slipped 3.6% this year, versus an 8.6% gain for the S&P 500 Index.

(Updates with story links and additional details throughout.)

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Source: finance.yahoo.com

Author: Katherine Chiglinsky and Stephen Stapczynski


ForexLive Asia FX news wrap: China services PMI improves again

ForexLive Asia FX news wrap: China services PMI improves again

  • Australia’s 2nd most populous state may get a ‘road map’ out of lock down
  • PBOC sets USD/ CNY reference rate for today at 6.8605 (vs. yesterday at 6.8891)
  • ByteDance needs Chinese government approval to sell the US operations of TikTok
  • Sinovac coronavirus vaccine candidate approved for emergency use in China
  • Forex news for Asia tradingMonday 31August 2020

    Source: www.forexlive.com


    Indians talking Mike Clevinger trade with AL Central rival White Sox

    Indians talking Mike Clevinger trade with AL Central rival White Sox

    The most intriguing  trade talks before Monday’s trade deadline are between the Cleveland Indians and Chicago White Sox, who are actively involved in discussions on a deal that would send Cleveland starter Mike Clevinger to Chicago, according to two persons with direct knowledge of the talks.

    The persons spoke to USA TODAY Sports on the condition of anonymity because talks are ongoing and other teams are in pursuit of Clevinger.

    It’s no secret that Cleveland has been listening to offers to Clevinger to help their ailing offense, but stunning they would consider trading him to Chicago, with the two teams separated by only one game in the AL Central entering Sunday.

    Clevinger, one of Cleveland’s top three starters, certainly would bolster the White Sox’s thin rotation, joining Lucas Giolito, Dallas Keuchel and Dylan Cease.

    The White Sox (20-13) haven’t made the playoffs since 2008, but they have a 97.6% chance to reach the postseason entering Sunday’s games, according to FanGraphs. Clevinger could vault the team into World Series contention.

    Cleveland (21-12), which leads the AL Central, badly needs to enhance its offense, particularly in the outfield. The Indians outfield ranks last in the American League with a .185  average and an MLB-worst six homers through Saturday.

    The White Sox would likely include outfielder Adam Engel and perhaps pitching prospect Michael Kopech, 24, who opted out of the season after recovering from Tommy John surgery.

    Chicago picked up outfield depth earlier this week by acquiring Jarrod Dyson from the Pittsburgh Pirates. They also are in need of a pitcher after veteran Gio Gonzalez went on the injured list with a strained right groin, calling up rookie Dane Dunning from their alternate-site camp to make Sunday’s start against the Kansas City Royals.

    The 29-year-old Clevinger – who may be the pitcher on the market – was demoted after violating the league’s safe and healthy protocols, but returned to the majors on Aug. 26. 

    He is under team control through 2022, earning a prorated $4.1 million ($1.518 million) this year, and is arbitration-eligible the next two years. He has  a 2.97 ERA with 10.22 strikeouts per nine innings since 2017.

    Source: www.usatoday.com


    Buffett’s Bet Paves Way for Japan as a Global Value Trade

    Buffett’s Bet Paves Way for Japan as a Global Value Trade

    Warren Buffett

    Warren Buffett

    Photographer: Daniel Acker/Bloomberg

    Photographer: Daniel Acker/Bloomberg

    Warren Buffett’s $6 billion wager on Japan’s trading companies may serve as a catalyst to bring back foreign investors to the country’s value-sector heavy stock market, according to some strategists.

    Berkshire Hathaway Inc.’s purchase of stakes in five major trading firms that dominate Japan’s energy and raw-materials industries — Itochu Corp., Marubeni Corp., Mitsubishi Corp., Mitsui & Co. and Sumitomo Corp. — shows the U.S. conglomerate is likely looking beyond the pandemic and betting on global growth, said Amir Anvarzadeh, a senior strategist at Asymmetric Advisors in Singapore.

    “Given the highly cyclical nature of the Japanese market, the bets on trading firms seem to underline his bet that perhaps economic cycles are bottoming out and he’s looking beyond the pandemic,” said Anvarzadeh. “If value starts to outperform growth, then investors will start focusing on Japan — and that would be a bigger change than what Buffett does.”

    Japanese shares at steep discount to history versus global peers

    Japan looks like a sensible choice for the global value investor, with its shares trading well below their average historical relative valuation to world peers, at least on a forward price-earnings basis. Classic value sectors — industrials, financials and materials — make up about 37% of the benchmark Topix Index, according to data compiled by Bloomberg.

    Shares of all trading houses jumped Monday, giving a boost to the beleaguered Topix which is down 6% this year, versus a 4% rise in the MSCI AC World Index. Foreign investors have sold a net $43 billion of Japanese shares so far in 2020, on course for the biggest annual withdrawals since 2018.

    The revelation of the Berkshire stakes comes as investors are digesting Friday’s announcement that Prime Minister Shinzo Abe is to step down, which sent the Topix sliding as much as 1.6% that day. The departure of the country’s longest-serving premier could put political risk back on the agenda, though most market watchers don’t expect government policies to change much.

    Japan Stocks a Buy for Funds Betting on Abenomics Continuity

    Buffett, who turned 90 on Aug. 30, has purchased other commodity-related names recently, such as Barrick Gold Corp., suggesting Berkshire is shifting its portfolio to hedge against future inflation, said Shinichi Ichikawa, a senior fellow at Pictet Asset Management in Tokyo. Japanese trading company names are also good hedging picks, he said.

    “While it’s not clear whether this will affect only specific sectors or the Japanese market as a whole, Berkshire’s bet may become a catalyst for foreign investors to take notice and look for other Japanese stocks that act as good hedges against inflation,” Ichikawa said.

    Source: www.bloomberg.com

    Author: By
    Shoko Oda
    and
    Abhishek Vishnoi


    Buffett’s Berkshire Wagers $6 Billion on Japan Trading Firms

    Buffett’s Berkshire Wagers $6 Billion on Japan Trading Firms

    Warren Buffett’s Berkshire Hathaway Inc. bought stakes in five of Japan’s biggest trading companies, adding to the billionaire investor’s wager on the commodities sector and marking one of his largest-ever forays into Asia’s second-largest economy.

    The investments into commodity-centric Japanese conglomerates known as “sogo shosha,” disclosed in a statement from Berkshire on Monday in Tokyo, underscore Buffett’s willingness to bet on economically sensitive companies despite the pandemic. Valued at more than $6 billion, his wager comes as global investors have pulled $43 billion from Japanese stocks this year in favor of high-flying U.S. technology shares and other companies viewed as more resilient to economic turmoil.

    Berkshire said it acquired stakes of about 5% in Itochu Corp., Marubeni Corp., Mitsubishi Corp., Mitsui & Co. and Sumitomo Corp. over the past twelve months. Shares of all five companies jumped at least 4% in Tokyo trading on Monday and Japan’s benchmark Topix index rose as much as 1.9%.

    Watch: Shares of Japan’s five leading trading companies are surging in Tokyo after Warren Buffett’s Berkshire Hathaway announced a 5% passive stake in each firm.

    (Source: Bloomberg)

    While Buffett has stayed relatively cautious with his record cash hoard since Covid-19 rippled through the global economy, his Omaha, Nebraska-based conglomerate has been adding to its commodities exposure with deals including a $4 billion agreement to purchase most of Dominion Energy Inc.’s natural gas pipeline and storage assets in July.

    Valuations in the sector have cheapened relative to the broader stock market in recent years, weighed down by falling commodities prices and investors’ preference for growth stocks like Amazon.com Inc. Most of the Japanese companies targeted by Berkshire trade at less than book value and offer higher dividend yields than the Topix.

    “These trading companies generate strong cash flow, they pay out a lot of dividends and they have businesses that can’t be easily replicated,” said Thanh Ha Pham, an analyst at Jefferies Japan Ltd.

    Buffett’s wager could help bolster sentiment toward both commodity plays and Japan. The $5 trillion economy is not only grappling with a persistent coronavirus outbreak and the postponement of the Tokyo Olympics, it’s also going through a leadership transition after Prime Minister Shinzo Abe announced his resignation for health reasons last week. Before its rally on Monday, the Topix had dropped for three straight days and underperformed regional peers in 2020.

    “I am delighted to have Berkshire Hathaway participate in the future of Japan,” Buffett said in the statement. “The five major trading companies have many joint ventures throughout the world and are likely to have more of these partnerships. I hope that in the future there may be opportunities of mutual benefit.”

    Buffett visited Japan after its 2011 tsunami and nuclear disaster, but he has stayed mostly quiet on investments in the country until now. Speculation that he might be eyeing Japanese stocks has been swirling since September 2019, when Berkshire completed the biggest-ever yen-denominated bond sale by a non-Japanese borrower.

    Japan’s trading houses have roots dating back hundreds of years. They supply the resource-poor nation with everything from natural gas to noodles, and have spent the last few decades transforming into conglomerates that hold equity stakes in hundreds of companies around the world. While they’ve diversified into areas like textiles and machinery, they still derive much of their revenue from energy, metals and other commodities.

    Itochu outperforms peers on diversified business

    Berkshire said it plans to hold the Japan investments for the long term and has pledged to only own as much as 9.9% of the shares in any of the five companies, unless given specific approval by the investee firm’s board of directors.

    “It’s bright news for not only the company but also Japan’s stock market,” an Itochu spokesman said. Mitsubishi said it has been contacted by Berkshire but isn’t able to provide further details. Sumitomo said it will engage in dialogue.

    The investments represent a notable push abroad by Berkshire, which has long had its biggest holdings in U.S. companies including Apple Inc. and Coca-Cola Co. Buffett said in 2018 there was a good number of countries he’d be willing to invest in, although foreign firms didn’t turn to Berkshire for funding as quickly as U.S. companies might. Berkshire’s offshore wagers include China’s BYD Co. and Brazilian payment company StoneCo Ltd.

    This isn’t the first time Buffett has invested in multiple competitors from one sector. Berkshire took stakes in four major U.S. airlines in 2016, though it ended up selling in 2020 as the pandemic brought most air travel to a halt. The company is also a major investor in several U.S. banks.

    Buffett, who celebrated his 90th birthday on Aug. 30, has built Berkshire into a conglomerate valued at more than $521 billion, with operations ranging from insurers to industrial giants like Precision Castparts Corp. and retailers such as Fruit of the Loom. Berkshire’s equity portfolio totaled about $207 billion at the end of June, while it’s cash pile grew to a record $146.6 billion. The stock has slipped 3.6% this year, versus an 8.6% gain for the S&P 500 Index.

    — With assistance by Tom Redmond, and Masumi Suga

    (Updates with story links and additional details throughout.)

    Source: www.bloomberg.com

    Author: By
    Katherine Chiglinsky
    and
    Stephen Stapczynski


    Buffett’s Berkshire Wagers $6 Billion on Japan Trading Firms


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