How bad could it get? America’s ugly election

Japan Inc is caught in the rift between

America and China

Japanese business

Rebalancing act

Safe as houses

Sources: Datastream from Refinitiv; Bloomberg

Market capitalisation

150

100

50

0

20

18

16

14

12

2010

Marubeni

Sumitomo

Mitsui

Mitsubishi

Itochu

Financials

Year ending March 2020

 

 

Mitsubishi

132.9

 

Itochu

98.8

 

Mitsui

61.9

 

Marubeni

61.4

 

Sumitomo

47.7

 

Japan, selected trading companies, $bn

Operating

profit/loss

Revenues

Company

3.0

3.5

1.7

-1.2

1.4

Warren Buffett famously likes his businesses simple to understand and transparent.

Why, then, has his conglomerate, Berkshire Hathaway, poured $6bn into 5% stakes in

Japan’s five biggest trading houses? Mitsubishi, Itochu, Mitsui, Marubeni and Sumitomo

do not appear to meet either criterion. They run a bewildering array of subsidiaries in

most sectors of the economy. In that they bear a passing resemblance to Berkshire itself.

Prehaps more important, though, they satisfied two other Buffett must-haves: their

shares, dented by covid-19, looked cheap, and they pay reliable dividends. 

Berkshire Hathaway’s Japanese bet

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56

Business

The Economist

September 5th 2020

2