Sumitomo Stock Leads Trading Houses Higher on Berkshire Stake Speculation

Sumitomo Corp. (8053.T) shares climbed significantly on Thursday after a report indicated that Warren Buffett's Berkshire Hathaway is considering an increase to its holdings in the company and its peers. The news lifted investor sentiment across Japan's major trading houses.

Details of the Report

According to a Bloomberg report, Berkshire Hathaway plans to retain its stakes in Japan’s five largest trading houses and is also weighing an increase to its holdings. The report cited comments made by Masahiro Okafuji, the chairperson of Itochu Corp., another major trading house.

This development reinforces earlier signals from Berkshire. In an interview earlier this month, Berkshire Hathaway Vice Chairman Greg Abel stated that the conglomerate planned to increase its stakes in the five companies, known collectively as "sogo shosha."

Market Reaction

Sumitomo emerged as the top performer among the group following the news. The stock's performance on Thursday included:

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• Sumitomo Corp. shares rising 3.1% to close at ¥1,841.
• The other four trading houses—Mitsubishi Corp., Mitsui & Co., Itochu Corp., and Marubeni Corp.—posted gains of between 0.5% and 2.5%.

Context for Investors

Berkshire Hathaway's initial investment in the sogo shosha in 2020 drew significant attention to the traditionally undervalued sector. The conglomerate currently holds stakes ranging from 9% to 11% in each of the five firms.

Continued interest from a prominent investor like Berkshire is viewed by the market as a strong vote of confidence in the business models and long-term value of these diversified Japanese conglomerates. Any move by Berkshire to increase its investment would likely provide further support for their valuations.