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Warren Buffett’s stamp of approval helps Japan’s Mitsubishi shed conglomerate stigma

Warren Buffett’s stamp of approval helps Japan’s Mitsubishi shed conglomerate stigma

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Warren Buffett's stamp of approval helps Japan's Mitsubishi shed conglomerate stigma

Warren Buffett’s vote of confidence in Japanese trading houses is helping Mitsubishi Corp (8058.T) overcome long-held investor wariness about its complex global business that covers everything from sausages to natural gas, a top executive said.

Japan’s largest trading house has seen heightened interest from potential investors since Buffett’s Berkshire Hathaway (BRKa.N) took a stake in 2020 that it later increased, Kenji Kobayashi, Mitsubishi’s chief stakeholder engagement officer, told Reuters.

“Until fairly recently, being an industrial conglomerate had negative connotations,” Kobayashi said in an interview. “More people will come to meet a company Berkshire has invested in. The hurdles have come down significantly.”

The Berkshire investment in Mitsubishi and rivals Itochu (8001.T), Marubeni (8002.T), Mitsui (8031.T) and Sumitomo (8053.T) has also focused global attention on Japanese stocks in general and coincided with a push by the Tokyo Stock Exchange for improved use of capital that has seen companies boost dividends and buy back shares.

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The result has put Japanese equities soundly back in fashion for the first time in years, as investors bet that more companies are serious about improving governance and returns.

The Nikkei (.N225) has jumped 29% so far this year, outperforming both the S&P 500 (.SPX) and the FTSE 100 (.FTSE). Tellingly, the index has also hit its highest since 1990 – near the peak of the asset bubble when Japan was still a more dominant force in the global economy.

Attitudes about the need to engage with external stakeholders – including investors – are now changing rapidly in Japan, at least among larger firms, Kobayashi said, highlighting how Japan Inc has become less insular in recent years.

GOING DIRECT

Mitsubishi is now reaching out directly to overseas investors, something it used to outsource to brokerages. It met with some 100 foreign investors in the past half a year, Kobayashi said, double the number from last year.

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“We’re taking an active targeted marketing approach, particularly towards foreign investors,” he said.

Appointed as the trading house’s first chief stakeholder engagement officer in April, Kobayashi is now focused on wooing investors who focus on growth, not just value.

Berkshire, synonymous with the philosophy of value investing that Buffett studied at Columbia University under Benjamin Graham, said in June it increased its stakes to average more than 8.5% in the five trading houses.

Berkshire first announced roughly 5% stakes in August 2020, with Buffett saying the trading houses “have many joint ventures throughout the world and are likely to have more”.

Since then Mitsubishi’s share price has more than trebled, when dividends are included, although that’s still slightly behind top performer Mitsui, which has returned 237%, according to LSEG data. The Nikkei has returned 54%.

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The trading houses are “a cross-section of not only Japan but of the world”, Buffett told the Nikkei newspaper in April, adding they were “similar to Berkshire”.

Still, Mitsubishi is trading at a price-to-book ratio of just a little over 1, or at almost no premium to the value of its assets.

“We have yet to make the case for our growth potential to the market,” Kobayashi said. 

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Budget 2024-25: Sindh announces up to 30pc increase in salaries

Budget 2024-25: Sindh announces up to 30pc increase in salaries

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Budget 2024-25: Sindh announces up to 30pc increase in salaries

The Sindh government has proposed up to 30 percent increase in salaries of its employees in the budget for next fiscal year 2024-25. 

Chief Minister Murad Ali Shah, who also holds the portfolio of finance minister, presented the budget in the provincial assembly on Friday. 

He said the government had proposed 30pc increase in salaries of officials from Grade 1 to 6, adding that there was 25pc increase for officials of Grade 7 to 16. Similarly, officers from Grade 17 to 22 would get 22pc hike in their salaries. 

Furthermore, the provincial government has propsed 15pc increase in pension of the retired employees. 

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Presenting the budget with a total outlay of Rs3,352 billion, he said, the government had decided to allocate Rs959 billion for development projects.

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Rs37,000 minimum wage: Sindh follows in the footstep of federal govt, Punjab

Rs37,000 minimum wage: Sindh follows in the footstep of federal govt, Punjab

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Rs37,000 minimum wage: Sindh follows in the footstep of federal govt, Punjab

The Sindh government has revised the minimum wage for unskilled labourers to Rs37,000 in line with decisions of the federal and Punjab governments. 

The minimum salary has been increased by Rs5,000 as previously it stood at Rs32,000. The proposal was laid forth by Chief Minister Murad Ali Shah while presenting the budget for the fiscal year 2024-25. 

Meanwhile, the Sindh government has proposed up to 30 percent increase in salaries of its employees in the budget for next fiscal year 2024-25. 

The chief minister said the government had proposed 30pc increase in salaries of officials from Grade 1 to 6, adding that there was 25pc increase for officials of Grade 7 to 16. Similarly, officers from Grade 17 to 22 would get 22pc hike in their salaries. 

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Furthermore, the provincial government has propsed 15pc increase in pension of the retired employees.

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Budget 2024-25: Let’s figure out the cost of essentials

Budget 2024-25: Let’s figure out the cost of essentials

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Budget 2024-25: Let's figure out the cost of essentials

The federal government has announced a staggering Public Sector Development Programme (PSDP) worth Rs1,500 billion. 

According to the budget document, all federal divisions have been allocated budget, except the Poverty Alleviation and Special Safety Division, which deals directly with matters concerning 95 million people who are living in abject poverty. 

Sadly, the Poverty Alleviation and Special Safety Division gets nothing in the PSDP 2024-25. 

Worse still, the Ministry of Poverty Alleviation and Social Safety does not have any minister as its head, rendering it almost moribund for more than 10 months. Earlier, Dr Sania Nishtar was chairing it during the PTI government, followed by Shazia Marri during the PDM government. 

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Last year, 12.5 million people slipped into poverty, which took it from 34.2pc to 39.4pc, according to the World Bank. 

The government has conveniently ignored the poor in the budget. Other than announcing Rs598.71billion under the Benazir Income Support Programme (BISP), no substantial amount has been earmarked for reducing poverty. 

Your next read: BUDGET 2024-25 – A LAYMAN’S GUIDE 

Analysts believe that 27 percent increase in BISP from Rs471.3 billion to Rs598.71 billion has been made to placate the Pakistan Peoples Party, which may take the wind out of PML-N’s sails anytime. 

BURGEONING TAXES 

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On the other hand, if we delve into the details of burgeoning taxes, Sales Tax stands out in afflicting the poor the most. 

Now a sales tax of 10pc will be charged on stationery items. 

Tribal area residents who have been experiencing extreme poverty will now have to pay 6pc tax on the supply and import of plant machinery as well as electricity on both residential and commercial connections. 

Following the similar trajectory, a 10pc sales tax will be charged on the local supply of vermicelli, buns, poultry feed, cattle feed, sunflower seed meal, newsprint, books, oil cakes and tractors. 

On mobile phones whose value is less than $500 (Rs139,240), 18pc tax has been imposed. If the value of purchased phone exceeds $500, an existing rate of 25pc will remain unchanged. 

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Earlier, the retailers of leather and textile products who paid 15pc sales tax will now have to pay 18pc tax. 

Drug prices will increase massively as the sales tax on raw materials used in production of pharmaceutical items has been raised to 18pc from 1pc. This will be applicable on medical treatment, diagnostic equipment, heart surgery, neurosurgery, electrophysiology, endoscopy, endosurgery, oncology, urology, gynaecology, disposables and other medical equipment.

Besides, 20pc sales tax on import of syringes, needles, catheters, cannulae, blood collection tube of glass and blood collection tube of PET.

Moreover, charitable hospitals with 50 or more beds will pay 18pc sales tax on imported medical goods. 

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