Buffett's latest move has sparked market imagination, and it may further increase investment in the Japanese stock market.

Atsuko Ishitoya, a strategist at Daiwa Securities in Japan, said, “Berkshire Hathaway's plan to issue Japanese yen bonds raises speculations about whether this company will buy more shares of trading companies.”

Buffett has favored the Japanese stock market in recent years. In August 2020, Berkshire announced for the first time that it held 5% of Japan's “Big Five Trading Companies”.

After Berkshire issued Japanese yen bonds in April last year, Buffett immediately visited Japan and met with Japanese trading company executives. Buffett said in an interview with “Nihon Keizai Shimbun” that he is very optimistic about Japanese stocks and is considering further investment in Japanese stocks. He also revealed that the shareholding ratio of Berkshire's five major trading companies in Japan has been raised to 7.4%, adding that this is Berkshire's biggest investment outside of the US.

Afterwards, Buffett announced an increase in shares in companies such as Mitsubishi Corporation and ITOCHU Corporation. In June 2023, Berkshire announced that it had increased its shareholding ratio to more than 8.5%. The move boosted confidence in Japan's overall stock market and pushed the Japanese stock market to a 34-year high.

In February of this year, in a letter to shareholders, Buffett revealed that Berkshire already holds about 9% of the shares in the five companies mentioned above.

Munger revealed that the logic behind Buffett's borrowing money to buy Japanese stocks in Japan was: “The interest rate in Japan is 0.5% per year for 10 years. So you can borrow all the money 10 years in advance, and you can buy stocks. These stocks have a 5% dividend, so there's a lot of cash flow, no investment, no thinking, and nothing.”

Buffett said in a shareholder letter that diversified business, high dividends, high free cash flow, and prudent issuance of new shares are important reasons why it favors the “Big Five Trading Companies.” Regarding when to sell this investment, Buffett said that Berkshire plans to hold these investments for 10 to 20 years.

Buffett has revealed that he is considering buying Japanese stocks other than the big five trading companies, and said he will start the idea of additional investment if the stocks are further undervalued.

If the rumor comes true this time, it means Berkshire will be the first major non-financial overseas bond issuer to issue yen bonds in the Japanese market after the Bank of Japan cancels its negative interest rate policy.

Despite rumors in the market that Buffett will increase his holdings in Japan, there are recent signs of foreign investment leaving Japan in terms of capital.

Net sales of Japanese stock spots and futures at the end of March by foreign investors hit a six-month high. According to Japan Exchange Group data, foreign investors sold 1.18 trillion yen (approximately RMB 56.2 billion) of net stock spots and futures in the week ending March 29, the highest level since the last week of September 2023.

Analysts pointed out that the main reason for the sell-off by foreign investors is that some funds are making profit settlement, and some funds are making position adjustments at the end of the quarter.