Foreign investors are turning their attention once more to the Japanese stock market, where shares remain undervalued even as they experience record profits. That makes Japan ripe with opportunities for value investors, said Seiji Nakata, CEO of Daiwa Securities Group Inc, in an interview cited in an article in Investing.

Nakata bolstered his claim by highlighting recent investments in several Japanese trading houses made by Warren Buffett as well as an increase in net buying of Japanese shares by overseas investors. It’s a trend that is being seen globally, as value stocks generally outperform growth stocks during periods where inflation is high. And as interest rates rise around the world, with central banks trying to reign in elevated inflation, more and more investors are turning to value stocks, both domestic and foreign. That gives the Japanese market an advantage, Nakata said, according to the article. Moreover, shareholder activism is on the rise in Japan, with investors pushing for companies to be more diverse, take a harder look at their portfolios, and undo cross-shareholdings. That shift could make the Japanese stock market more appealing to overseas investors. And indeed, foreigners purchased a net $9.77 billion (1.287 trillion yen) in Japanese shares in November, the most net purchases since 2020, according to Tokyo Stock Exchange data that is cited in the article.

The last time foreign investors flooded into Japan’s market was 2013, as optimism for “Abenomics”—the monetary policies put forth by former premier Shinzo Abe—was running high. Meanwhile, Buffett’s conglomerate Berkshire Hathaway made headlines in November after they announced that they had increased their positions to more than 6% in each of the five biggest trading houses in Japan.