Nikkei 225 Spikes After Warren Buffett Bets on 5 Sogo Shoshas

The Nikkei 225 index is among the best-performing indices in Asia today. The index is up by more than 1.77%, which is a better performance than the Hang Seng, which is up by 1.38% and the Shanghai composite that is up by 0.80%.

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Warren Buffett invests in Japanese trading firms

The biggest catalyst for the performance of the Nikkei 225 is Warren Buffett. In disclosures released earlier today, Warren Buffett revealed that Berkshire Hathaway had taken substantial holdings in Japan’s leading trading companies. The firm has bought shares worth billions of dollars in companies like Marubeni, Sumitomo, Itochu, Mitsubishi, and Mitsui. According to CNBC, the holdings are worth about $6.25 billion. Also, the Oracle of Omaha has said that he remains ready to increase his holdings in these companies.

For starters, these companies have a few things in common. For one, they are all old companies that were started more than 50 years ago. Also, they are popularly known as sogo shosha, meaning that they are conglomerates that import almost everything to Japan. Among the goods they import are fabrics, energy, and metals.

Indeed, these companies are among the best-performing stocks in the Nikkei 225 index. Marubeni shares are the best-performers, gaining by 11%. It is followed by Sumitomo, Mitsubishi, Mitsui, and Itochu, which are all up by more than 7%.

The investment by Warren Buffett comes at a time when these sogo shoshas have been under pressure. The coronavirus pandemic has affected trade networks, where these companies source their goods. It also comes at a time when the Japanese economy is going through its toughest period in modern history.

Other top performers in the Nikkei 225 are Citizen Holdings, Isetan Mitsukoshi, Sojitz, and Pacific Metals. On the other hand, the worst performers are KDDI, Nippon Telegraph, NTT Docomo, Familymart, and Nippon Light metals.

Nikkei 225 technical outlook

The Nikkei 225 index rose sharply today after suffering a sharp decline on Friday after Shinzo Abe’s resignation. The index is trading at ¥23,282, which is the highest it has been since Thursday last week. On the daily chart, the index remains above the 50-day and 100-day exponential moving averages. The price is slightly below the important resistance that is shown in purple. Therefore, I suspect that it will continue moving higher as bulls aim for the psychologically-important level of ¥23,300.

On the flip side, a move below the support at ¥21515 will invalidate this trend. This price is along the lowest level on June 15.

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Nikkei 225 technical chart

Nikkei 225

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