Berkshire Hathaway has increased its stakes in Japan’s biggest trading houses, a move that is expected to offer support to the wider Tokyo stock market.

Shares of major trading houses Mitsubishi, Marubeni, Mitsui, Itochu and Sumitomo climbed 4% Tuesday morning in Tokyo, after filings to the Finance Ministry showed Monday that Berkshire’s average holding across the stocks had increased by just over percentage point to about 9.3%.

Investors had been speculating over Warren Buffett’s next move since his annual letter to shareholders said that Berkshire was looking to increase ownership in Japan’s five largest trading houses "over time.”

"It’s a signal from Buffett” that he still has faith in shares of trading houses, which have been correcting since last year, said Hideyuki Ishiguro, chief strategist at Nomura Asset Management. "It’s also a message from him that Japanese stocks are still relatively cheap.”

Buffett has indicated that the trading houses themselves have agreed to "moderately” relax a previous ceiling of 10% on his stakes, leaving room for further buying. His purchases in 2020 and 2023 added fuel to broad-based rallies in Japanese equities.

Investors cautioned that the wider impact may be more limited this time, as share markets in Japan and around the world struggle with the potential impact of tariffs on global economic growth.

"It may not have quite the same punch compared to a few years ago,” said Yugo Tsuboi, chief strategist at Daiwa Securities Group. But there’s still room for Buffett to increase his stake, so investors will speculate and buy in the market tomorrow, he said.

Mitsubishi’s representative said Berkshire likely increased its stake on mid- to long-term growth expectations, and that it continues to engage in discussions on ways to collaborate. Itochu’s spokesperson said it expects Buffett’s stake to increase further, while Marubeni said it welcomes the investment.

While the increase wasn’t surprising, it may "provide a sense of security about buying Japanese stocks at a time when the Nikkei is seeing some weakness,” said Jumpei Tanaka, head of investment strategy at Pictet Asset Management Japan. "The environment surrounding Japanese equities is not as good as it used to be.”

The 225-issue Nikkei average has dropped more than 6% this year while the broader Topix index is down just over 1%. Meanwhile in the U.S., the S&P 500 has dropped about 4.5%.

The next focus point will be news flow relating to Berkshire’s yen bond issuance, SMBC Nikko Securities analyst Akira Morimoto wrote in a note.

Berkshire in October sold its biggest-ever yen bond since its debut issuance in 2019, and has been a regular issuer in the Japanese currency. Its fundraising is being closely watched by equity-market investors because Buffett has used yen funds raised in the bond market to purchase holdings in Japanese companies.