SHARES of Japanese trading companies that Warren Buffett has invested in climbed to record highs after analysts at Jefferies Financial Group raised their price targets by more than 40 per cent.

Mitsui & Co has gained the most, rising as much as 2.8 per cent to 5,182 yen (S$49.80) and breaking above Jefferies’ new price target of 5,000 yen announced in a report on Monday (Jun 12). Mitsubishi, Itochu, and Sumitomo also jumped, though they stayed below the renewed targets.

The trading houses have been renewing record highs since Buffett said in April that he’s raised his holdings in them and is looking to increase his exposure to stocks in Japan. The billionaire investor’s endorsement, combined with better shareholders returns including buybacks and efforts to improve ESG scores, have helped boost market sentiment towards the companies, according to the Jefferies report.

Mitsubishi, Japan’s biggest trading house, has gained 51 per cent this year, beating the Topix index’s 20 per cent advance. The companies could outperform the benchmark by another 10 per cent to 30 per cent to reach par levels in terms of the valuations of average Japanese listed stocks, Jefferies analysts including Than Ha Pham wrote.

Mitsubishi closed 2.9 per cent higher, followed by Sumitomo’s 2.6 per cent gain, Mitsui’s 2.2 per cent increase, and Itochu’s 1.2 per cent rise. The Topix wholesale trade index, which includes the four trading firms, was the second-biggest gainer among industry gauges, gaining about 2 per cent. That helped the broad Topix index end 1.2 per cent higher on Tuesday. BLOOMBERG