Do you want to capitalize on the potential growth of the Japanese stock market, but don’t know how to get started?
The Japanese stock market is one of the world’s largest and most active in terms of value traded. Economic dynamics have resulted in a shift from exports and manufacturing towards technology-led firms and sectors, driving up economic growth and enticing foreign investors.
For those interested in taking advantage of Japan’s attractive investment opportunities there are several simple steps to buying shares (called stocks) of Japanese companies listed on their stock exchange. In this article, we will explain what you need to know about investing in the Japanese Stock Market and provide advice on how to buy Japanese stocks.
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How to Buy Japanese Stock
Investing in Japanese stocks is a great way to diversify your portfolio, and foreigners can open a trading account with a Japanese broker. SBI Shoken and Rakuten Shoken offer English-language support, and some international brokers may offer commission-free trading of larger stocks.
It is possible to buy and sell stocks on the TSE/TYO exchange through two Japanese brokers. It is important to note that there are U.S.-based stock brokers which may be less costly than trading Japanese stocks, so this should be taken into consideration when selecting a broker.
Performance of Japanese Stocks (MSCI Japan)
The performance of Japanese stocks, as measured by the MSCI Japan index, has been mixed over the past few years. Over the last month, the index has seen a modest 0.31% increase in value. However, over the last year it has seen a significant decline of 10.24%. This is likely due to the economic impact of COVID-19 on Japan’s economy and stock market.
Japanese stocks have seen increases over the past three and five years of 2.85% and 10.41%, respectively, despite recent declines. The Japanese government is taking steps to stimulate its economy which could help support stock prices that may be poised for growth in the long term.
Japan ETFs with hedged currency risk
Currency hedged investing in Japanese stocks is becoming a popular option for investors to diversify their portfolios and manage currency risk. There are 16 ETFs tracking 9 indices offering an array of investment options while the TER ranges from 0.17% to 0.64%. This makes the investments cost-effective while still providing exposure to the Japanese market with minimal risk.
One such index is the FTSE Japan (EUR Hedged) index, which tracks large and mid cap stocks in Japan while being hedged against the Euro (EUR). This provides investors with an opportunity to invest in Japanese equities without having to worry about fluctuations in the exchange rate between EUR and JPY, allowing them to focus solely on stock performance when making decisions about their investments.
Best Online Brokers for Trading in Japan
When it comes to trading in Japan, there are a number of online brokers that can provide access to the Japanese stock market. These include both Japanese and international brokers such as Interactive Brokers and Saxo Bank.
Depending on your trading style, you may want to consider different brokers for their specific advantages. For example, momentum traders may prefer a broker with low commissions and fast execution speeds while long-term investors may be more interested in a broker with low fees and reliable customer service.
Before choosing an online broker for trading in Japan, it is important to consider and compare commission rates, account minimums, trading platforms, and other services offered. Additionally, the language barrier should be taken into consideration if using a Japanese broker. Ultimately, the best choice depends on one’s own specific needs and preferences.
Trading Stocks in Japan
Investing in Japanese stocks can be a great way to diversify your portfolio and gain exposure to the world’s third-largest economy. Automobile and electronics companies are some of the most recognizable Japanese stocks, but you can also trade the stocks of companies that participate in a wide range of other industries, including food, textiles, chemicals, pharmaceuticals, oil and coal products.
When trading Japanese stocks, it is important to be aware of the minimum purchase amount per transaction, which is usually 100 shares. Additionally, ticker symbols for listed stocks are 4-digit numbers. Researching each company’s policies and risks is necessary before investing.
