Greg Abel, CEO of Berkshire Hathaway, addressed concerns regarding rising bond yields in Japan during a recent appearance on CNBC’s "Squawk Box." While Japan’s 10-year bond yield has reached a 30-year high, Abel indicated that this trend is not posing significant challenges for the country’s major trading houses in which Berkshire holds substantial stakes.
Abel emphasized that none of the trading companies he met with considered high yields a fundamental issue at this time. He noted that Japan’s yields, despite being at their highest in years, remain relatively low compared to those in other countries. Japan’s current 10-year bond yield is just above 3%, while the U.S. 10-year Treasury yield recently approached 4.8%.
Berkshire Hathaway owns interests exceeding 10% in five of Japan’s leading trading firms—Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo, which engage in diverse sectors from energy to consumer goods. During his visit to Tokyo, Abel met with representatives from these firms and confirmed the company’s ongoing commitment to strengthening relationships and exploring further investment opportunities in Japan and beyond.
Despite the high yields, Abel stated that Berkshire plans to raise debt in yen as appropriate. The investments in Japanese trading companies initially came with an agreement to limit stakes to under 10%. However, permission was granted to exceed this threshold six years after the initial investment, reflecting the strong returns these investments have generated.
Abel reaffirmed the long-term nature of their investment strategy, highlighting that Berkshire anticipates these partnerships will continue to yield significant benefits.
Bullet Points:
- Why this story matters: Highlights the resilience of major trading firms in Japan despite rising bond yields, indicating potential investment stability.
- Key takeaway: Berkshire Hathaway remains committed to its Japanese investments, viewing them as long-term opportunities.
- Opposing viewpoint: Some analysts may argue that rising yields could eventually impact trading houses’ financial performance.
