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Japan Forward
24-05-2025
- Business
- Japan Forward
Warren Buffett, A Japanese Love Call
It really is the end of an era. Warren Buffett, the greatest investor of modern times, is to retire at the age of 94. While maintaining his optimism about America, he has not made any significant new investments in his home market for some years. Even the sharp sell-off caused by President Donald Trump's tariff announcement on April 2 was not enough to entice him to deploy some of his record-breaking $334 billion cash pile. The message appears to be that United States stocks will have to get much cheaper before they become attractive in the eyes of the Sage of Omaha and his chosen successor, Greg Abel. The announcement was made at the annual shareholder meeting of his listed vehicle, Berkshire Hathaway, in early May. This event attracts tens of thousands of participants from far and wide, hence the nickname of "Woodstock for capitalists." Buffett's comments were particularly notable this year because it was the last time for him to respond to questions in that homespun but often illuminating style that he perfected. Particularly interesting was the praise he lavished on the five Japanese companies he has invested in – trading houses Mitsubishi Corporation, Mitsui & Co, Sumitomo Corporation, Itochu Corporation, and Marubeni. "We don't have any intention of trying to change what they've done because they do it very successfully," he declared. "Our main activity is just to cheer and clap." Warren Buffett answers questions on the monitor at the shareholders' meeting held in Omaha, Nebraska on May 3. (©Reuters) He also had a typically folksy take on cultural differences, noting that the best-selling Coca-Cola product in Japan is Georgia canned coffee. Meanwhile, Buffett's favorite, Cherry Coke, is much less popular. "I haven't converted them to Cherry Coke, and they're not going to convert me to Georgia coffee. But it's a perfect relationship." Buffett went further than mere flattery, stating that he hoped Berkshire Hathaway would hold its positions in the five traders for another fifty years. Coming from anyone else, such a comment might seem jokey or fanciful. But Buffett is renowned for his patience and long-term perspective. This is the man who studied the business record of IBM for fifty years before deciding to invest; who has held the stock of Coca Cola since 1988; who snapped up America's largest railway company in its entirety because "it was an opportunity to buy a business that will be around for one or two hundred years." Japan understands durability, too. More than half of the world's oldest companies are Japanese. The Sumitomo Group started in 1590. Japan's Mitsui family began business in 1673. Mitsubishi, though, is a relative newcomer, having been founded in the late nineteenth century. Buffett came to Japan late in life and via a circuitous route. An Israeli technology company in which he had bought a major stake had a Japanese subsidiary. And in former times, it was a listed company called Toshiba Tungaloy. With its factory in northern Honshu, it suffered damage from the devastating earthquake and tsunami that hit Japan in 2011. Buffett visited the stricken area and showed solidarity with the staff. Despite the wealth that Berkely Hathaway has amassed over the decades, Buffett leads an unassuming lifestyle in Omaha, Nebraska. Sometimes he takes breakfast at his local McDonald's, and he is a longstanding critic of "egregious" executive pay. The generally modest level of remuneration in Japan for CEOs and other key figures was appealing to him. He's mentioned it on several occasions. When did Buffett set his sights on the five traders? It's unclear, but my sharp-eyed colleague Ben Williams spotted the great man browsing a Japanese company handbook (an indispensable digest of corporate data) in a 2012 CNN feature. Buffett himself cites the solid dividends and share buybacks, which are part of Japan's recent corporate governance reforms, for clinching the deal. Without that change in corporate and investor culture, it is doubtful that Buffett would have bothered. Buffett and his team made the initial investments in 2020. Such is the enormous scale of Berkshire Hathaway's financial assets that taking a stake in just one of the Japanese traders would hardly have moved the dial, even if the stock did well. Buying into all five was unorthodox but delivered an excellent return. Especially when financed by Japan's super-low interest rates. Warren Buffett attends the Berkshire Hathaway shareholders meeting in Omaha, Nebraska, in May 2024. (©Reuters via Kyodo) Will Berkshire Hathaway invest in other Japanese companies? It is feasible but unlikely. There are many excellent candidates with inexpensive stock market valuations, but very few that are of sufficient size to make a difference to Berkshire's portfolio. On the other hand, it may continue to add to the existing stakes in the trading houses, if managements consent, as was set out in the original agreements. There is another intriguing possibility. On many occasions, including the recent shareholders meeting, Buffett and his team have expressed a strong desire to collaborate with the trading houses. What would such a collaboration look like? Probably it would involve large-scale infrastructure. Perhaps related to the energy needs of Japan and other Asian countries. Two years ago, Buffett's late partner, Charlie Munger, deplored the geopolitical fissure that had opened up between the US and China. It was, he termed, "stupid, stupid, stupid." Now the geopolitics are much worse and, as Buffett noted, trade wars can easily morph into shooting wars. It would be a fitting counterexample of the benefits of trade and openness if the great company created by Warren Buffett and Japan's famed trading houses could come together and build something new and substantial. Author: Peter Tasker Find other essays and analyses by the author on JAPAN Forward .
Straits Times
08-05-2025
- Business
- Straits Times
Singapore signals commitment, policies to draw green dollar during Ecosperity Week
Economic uncertainties may persist, but climate change is still something the world has to prepare for. ST PHOTO: LIM YAOHUI SINGAPORE – Despite faltering climate action around the world, Singapore recognises the urgency of tackling the crisis, and is signalling that it has the commitment and the right policies to draw in the green dollar. This was the message to global investors during Ecosperity Week, the flagship sustainability conference by Singapore investment firm Temasek held between May 5 and 8. It was conveyed in a few ways. First, by clearly communicating that Singapore is supportive of climate action, and that this approach is not subject to flip-flops. On May 6, Senior Minister Teo Chee Hean, who heads the Inter-Ministerial Committee on Climate Change, said in his keynote speech that Singapore will continue to work with partners to tackle the planetary crisis,even though it cannot be sure what other countries will or will not do. Pointing to the escalating impacts of climate change, SM Teo said: 'We will secure Singapore's future by doing our part and collaborating with the world to reduce emissions.' Singapore also sought to establish that it had the right policies to promote decarbonisation domestically and across the broader Asean region . Given the audience, the Republic also highlighted that this push to tackle climate change is not merely a cost to be shouldered, but there are economic benefits to be reaped as well . Ecosperity Week and its partner events were attended by business leaders, investors, philanthropists, policymakers and civil society leaders from around the world. Singapore is spearheading efforts to promote transition credits – a new class of carbon credits which can enable the early phase out of coal plants in the region. Coal is the most pollutive fossil fuel, and developing South-east Asia has some of the world's youngest coal plants. Tackling climate change would require such plants to be phased out as soon as possible, but given the long runway of coal plants in the region, this seems unlikely to happen on its own. Transition credits aim to monetise emissions savings from the early closure of coal plants. Revenue would come from the sale of carbon credits to companies or governments, with each credit representing a tonne of emissions avoided by shutting a power plant early. On May 7, it was announced that Japanese conglomerate Mitsubishi Corporation had joined Singapore's Keppel and investment platform GenZero in a climate initiative that aims to retire a Philippine coal plant early using funds from a transition credit scheme backed by the Monetary Authority of Singapore. The aim is to retire the plant by 2030 – ahead of its scheduled closure in 2040 – and replace it with renewable energy and battery storage. The initiative, if successful, could be a model used to shut down dozens of other coal plants early around the globe, especially in Asia. A report released on May 7 by global management consultancy BCG and Temasek showed that expenditure for climate adaptation and resilience is projected to rise to between US$500 billion (S$646 billion) and US$1.3 trillion a year by 2030. This presents an opportunity for investors to put their money into growth sectors for climate adaptation solutions, such as hazard warning systems, climate-resilient crops, and flood defences, among others. The importance of collaborations and partnerships — between countries and sectors — in tackling climate change was also repeatedly emphasised during the week. This is notable given the inward-leaning policies being promoted in other parts of the world. Tackling a planetary crisis like climate change cannot be done by one country alone, and collaborations can also help to broaden the market for sustainable investments. At Ecosperity Week and partner events like the GenZero Climate Summit and the Climate Group Asia Action Summit, at least three areas of collaboration were discussed : carbon markets, the Asean power grid and blended finance. Carbon markets allow countries to collaborate on climate action, as it allows funds to flow from large emitters, usually developed countries, to countries where carbon projects are usually hosted, usually developing countries. This can spark a whole industry – carbon services – which offers a wide range of opportunities, from carbon project development to monitoring and verification services and legal and regulatory consultancies. Singapore had identified carbon services as an engine of growth for its green economy in the Singapore Green Plan 2030, the nation's sustainability blueprint launched in February 2021 . On the Asean grid, Singapore has sent a strong policy signal with a goal that by 2035, some 30 per cent of its energy supply is expected to come from clean energy imports. This commitment provides investors with some degree of revenue certainty. But some investments, such as into subsea cables, can be costly and risky, which highlights the need for another form of collaboration between sectors. This is where blended finance comes into play, leveraging public and philanthropic funding support to entice private funding to come on board. Singapore's Ambassador for Climate Action Ravi Menon summed it up well when he spoke about the importance of 'how to make money work harder, more effectively'. Public funding is willing but insufficient, while private funding is ample but unwilling to commit owing to high risks or because returns are not commensurate with the risks, said the former chief of Singapore's central bank during a panel at the Philanthropy Asia Summit, an Ecosperity partner event. Collaboration of the public, private and philanthropic sectors on financing can significantly scale the amount of money available for sustainable investments. As Ecosperity Week wraps up, the 11th edition of the annual sustainability conference comes amid significant global headwinds to climate action – a far cry from some years earlier, when countries were racing to help their economies recover from the Covid-19 pandemic in an environmentally-sustainable way. Economic uncertainties and trade concerns are undoubtedly top of mind in the current geopolitical context. But climate change impacts will not spare us just because we are not paying attention. As SM Teo said: 'We must be clear-minded... Long-term success requires both a firm grasp of the demands of today and a steady eye on the needs of tomorrow.' Audrey Tan is an assistant news editor overseeing sustainability coverage. She has reported on the environment for more than a decade and hosts the Green Pulse podcast series. Find out more about climate change and how it could affect you on the ST microsite here.
NHK
04-05-2025
- Business
- NHK
Japan's firms conservative on profit forecasts amid US tariff impact
Some major Japanese companies are expecting a fall in their net profits for fiscal 2025 amid uncertainties caused by US tariff policies under the Trump Administration. Mitsubishi Corporation says it projects a 26.4 percent decline in its net profit for the business year through March 2026, compared to the figure the previous year. Mitsui & Co. also says it expects a 14.5 percent drop in its net profit for the year. The two Japanese leading trading companies said one reason is a projected drop in profitability stemming from a fall in resource prices. Since the United States imposed additional tariffs in April, concern over a global economic slowdown has led to a slump in crude oil prices. There are views that an economic slowdown in China due to the country's trade conflicts with the US may drive down prices of natural resources, such as iron ore and coal. Mitsubishi Corporation President and CEO Nakanishi Katsuya said his company would keep on monitoring macroeconomic factors for effects caused by further intensification of trade friction between the US and China. Shipping company Mitsui O.S.K. Lines said it sees net profit plunging 60 percent in fiscal 2025, as the risk of slowdown of global flows of goods linked to the US tariff measures becomes more apparent. The company cited a decrease in container transport of goods from China to the US, and lower car carrier shipments. The Japanese marine shipping company plans to set up an office in Washington in June to gather information on the Trump administration's policies. The company also plans to revise vessel operation in accordance with changes in demand.
