Warren Buffett’s Parting Gift To Japan Is Economic Gold

At least on Japan, Warren Buffett’s investment strategy seems to be of the better-late-than-never variety.

It was only after 60 years in the investment game that the Oracle of Omaha finally worked his way to Asia’s second-biggest economy. Buffett had kicked Japan’s tires before, but opted to deploy Berkshire Hathaway’s money elsewhere. That is, until 2020.

CEOs in Tokyo were as surprised as anyone to learn that the most celebrated value investor had plowed big money into five old-school trading houses: Itochu, Marubeni, Mitsubishi Corp., Mitsui & Co. and Sumitomo Corp. These century-old sogo shosha conglomerates were on the radar screens of very few global investors.

The fact that Buffett disclosed his Japan Inc. stakes as Covid-19 was ravaging the global economy made it all the more perplexing. But Buffett’s bet worked out so well that he’s been upping his holdings since then. And giving Japan some of the best headlines for which an ageing nation struggling in China’s shadow could hope.

Now, as Buffett, 94, prepares to step down, he’s making it clear Berkshire has no intention of selling any of its Japan shares. And Buffett’s successor Greg Abel says Berkshire could hold these stakes for 50 years — or longer.

Is the Tokyo establishment listening as Buffett tosses Japan a parting gift? To be sure, the investment position of one man or company isn’t a game-changer for a $4.2 trillion economy. Unless we’re talking Buffett and Berkshire.

The halo effect from Buffett’s Japan bet was one of the crowning moments of Prime Minister Shinzo Abe’s premiership. The late Abe took the reins in December 2012, his second time in the job. His Liberal Democratic Party had just returned to power thanks to Abe’s splashy plan to revitalize an economy suffering a bad dose of China envy.

Abe pledged to cut bureaucracy, increase productivity, modernize labor markets, make the public and private sectors more meritocratic, empower women and restore Tokyo’s place as the center of Asian finance.

Mostly, though, Abe let the Bank of Japan do the work. The BOJ’s ultraloose policies sent the yen 30% lower, boosting the economy and sending the Nikkei 225 Stock Average higher.

Abe did have one major reform: strengthening corporate governance. Abe’s party passed a U.K.-like stewardship code to boost returns on investment, give shareholders a louder voice and prod companies to diversify boardrooms.

By 2024, the combination of turbocharged monetary policy, a weak yen and buzz about corporate upgrades that even got Buffett off the fence sent the Nikkei to all-time highs, topping the 1980s “bubble economy” rally.

Now, of course, fallout from Donald Trump’s trade war has Japanese stocks wobbling. Also, years of over-promising on structural reforms and under-delivering are now catching up with Japan’s ruling LDP. And just over two months away from a national election.

Clearly, current Prime Minister Shigeru Ishiba wishes he had more time before voters went to the polls. The only thing weakening faster than Ishiba’s approval rating — in the low 30s, at best — is Japan’s economic prospects in 2025. With inflation rising faster than wages, consumer and business confidence are waning. President Trump’s 25% auto tariffs sure aren’t helping. Nor is the prospect of a 24% reciprocal Trump tax if Team Ishiba doesn’t offer loads of concessions in trade talks.

Enter Buffett. His parting gift to Japan is to remind the globe that a moment of extreme market volatility from New York to Shanghai to Tokyo can seem like a financial respite.

Look no further than Nada Choueiri, deputy Asia-Pacific director of the International Monetary Fund, saying the yen “remains a safe-haven currency given the strength of the economy, as well as the predictability and stability of the economy.”

Ishiba should lean into the “Buffett Effect” that has put Japan into the financial headlines for all the right reasons. Again, the musings of one man aren’t going to shake Japan out of the complacency that’s sadly more a feature than a bug.

But the best chance for Ishiba’s party to win votes on July 27 is to reclaim the mantle of change and increased competitiveness. Why not harness the Buffett Effect to telegraph an immediate doubling down on the very policies that drew Berkshire to Japan in the first place? It’s not like Tokyo has many other appealing options at the moment.