Berkshire Hathaway plans to issue yen bonds for the second time this year Analysts: Buffett may target financial and shipping stocks
Berkshire Hathaway plans to issue yen bonds for the second time this year, and the market speculates that Buffett may increase holdings in Japanese financial and shipping stocks. The company's fundraising plan has attracted investor attention, as its earlier purchase of shares in Japan's five major trading companies helped drive the Nikkei 225 to a historic high. Analysts point out that insurance companies and shipping companies may become Buffett's investment targets, and the fundamentals of the Japanese financial industry are strong, meeting his investment criteria
According to the Zhitong Finance and Economics APP, with Berkshire Hathaway (BRK.A.US) returning to the Japanese yen bond market, speculation has arisen that the "Stock God" Buffett is raising funds to increase holdings in Japanese value stocks. Market observers suggest that Buffett may be considering investing in Japanese financial and shipping companies.
It is reported that Berkshire Hathaway is planning its second issuance of yen bonds this year. Reports indicate that Berkshire Hathaway has hired Bank of America Securities and SMBC Nikko Securities to issue yen-denominated senior unsecured bonds.
Berkshire Hathaway's fundraising plans are closely watched by stock market investors, as earlier this year the company's purchase of shares in Japan's five major trading companies helped push the Nikkei 225 index to a historic high. In February this year, Berkshire Hathaway mentioned in its annual shareholder letter that the issuance of yen bonds provided most of the funds for investing in Japanese companies.
Eiji Kinouchi, Chief Technical Analyst at Daiwa Securities, believes that insurance and shipping companies could be Buffett's next choices. In a research report this week, he stated that although the news of Berkshire Hathaway issuing bonds led to a rise in the stock prices of Japanese insurance and shipping companies, they did not significantly outperform the market.
Data shows that the valuations of Japanese banks and insurance companies have declined since a large-scale sell-off in the Japanese stock market in early August. The expected price-to-earnings ratios of the TSE Insurance Index and the Bank Index are 9 times and 10.1 times, respectively, lower than the expected price-to-earnings ratios when these indices hit historical highs in early July (12.1 times and 12.4 times, respectively).
Analysts point out that if Buffett's investment choices in the Japanese stock market expand beyond the five major trading companies to other industries, this could be a support factor for the volatile Japanese stock market in recent months due to political uncertainty and exchange rate fluctuations.
Takashi Ito, Senior Strategist at Nomura Securities, also believes that Buffett is likely to buy Japanese financial stocks. He said, "The fundamentals of the Japanese financial industry are strong, which meets Buffett's criteria." He added that the Bank of Japan's shift in monetary policy will improve the profitability of the financial industry.
Nomura strategists, including Tomochika Kitaoka, found through stock screening that financial companies such as Mitsubishi UFJ Financial Group, Sumitomo Mitsui Trust Holdings, and Sompo Holdings Inc. fit the characteristics of Berkshire Hathaway's investment portfolio.
However, some observers believe that given Berkshire Hathaway's recent frequent sales of Bank of America stocks, Buffett's focus will remain on trading companies. Mineo Bito, President and CEO of Bito Financial Service Co., who often attends Berkshire Hathaway's shareholder meetings, said, "I don't think Buffett will buy Japanese bank stocks while selling Bank of America stocks." ”