Warren Buffett’s Strategic Shift: From Dismissing Japan to a $23 Billion Investment—Driven by Interest Rates

Renowned investor Warren Buffett once famously labeled Japan as ’uninvestable,’ reflecting his skepticism towards the country’s economic prospects. However, in a surprising turn of events, Buffett’s Berkshire Hathaway has now deployed a staggering $23 billion into Japanese markets. This dramatic pivot is largely attributed to the shifting landscape of interest rates, which have created new opportunities for value-oriented investors. Japan’s prolonged low-interest-rate environment, coupled with recent policy adjustments, has made its equities and debt instruments increasingly attractive. Buffett’s move underscores the importance of adapting investment theses to evolving macroeconomic conditions, particularly in global markets where monetary policy plays a critical role in shaping returns.

Warren Buffett’s not-so-secret strategy

Fast forward to today, and Warren has done a full 180. This year, Berkshire Hathaway reported that it now owns close to 10% in each of five Japanese trading firms—Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo. That level of ownership in a foreign country is rare for Warren, but that’s where he’s placing his bet now.

Warren first started buying into these trading houses in 2019, but the world found out in 2020—on his 90th birthday. He picked the firms because they act like diversified machines, touching sectors from energy and shipping to retail and food.

In other words, they look a lot like Berkshire itself. What drew him in? Reliable dividends, strong cash flow, and tight spending. And the same low rates that turned him off in 1998 are now helping him lock in profits. Warren financed the move by selling yen-denominated debt—cheap loans in Japan’s weak currency—and used the money to buy companies paying solid returns.

In 2024, Warren wrote to shareholders that he’d gotten permission from the five companies to go past Japan’s usual 10% ceiling, something few foreign investors are allowed to do. At the end of the year, the total value of his holdings in the five firms was $23.5 billion, and he had only paid $13.8 billion for them. That’s a profit of nearly $10 billion, straight off the playbook Warren used to run in the U.S.

But he wasn’t wrong to be cautious before. Currency risk is still a threat. The carry trade—borrowing cheap yen and investing it elsewhere—has collapsed before. Between 2022 and 2023, U.S. Treasury yields spiked, the yen surged, and investors panicked. That sudden wave caused serious losses across Asian stock markets and currencies.

Now, the Bank of Japan has even more pressure. Inflation expectations in Japan jumped again over the last three months. A BOJ survey released on Friday showed 86.7% of households now believe prices will go up in the next year. That’s the highest number since June 2024, and up from 85.7% in December. The same data showed Japanese companies are finally raising wages and prices—two things the central bank has been trying to trigger for years.

The BOJ had been leaning toward raising rates. All the signs are there. Wages are up. Prices are climbing. And inflation expectations keep pushing higher. That’s the kind of thing that normally leads to hikes.

But for now, interest rates in Japan are still low. And Warren’s still collecting dividends off debt that costs next to nothing. He passed on Japan once. But this time, he’s not walking away.

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