How to Buy Japanese Stocks from Inside Japan

Japan is one of the world’s biggest economies, and it’s a fantastic place to buy stocks. The primary stock market is the Tokyo Stock Exchange; it remains the third-largest stock exchange globally. And the stock market is home to some of the world’s most prominent companies, including Sony, Mitsubishi, Toyota, Nintendo, and Honda. 

But as with any foreign country – it can be complicated to buy stocks on the stock exchange. And Japan is not different. The biggest hurdle is the language barrier, as much of the Japanese stock exchange is without English translation. There are differences to stock markets in the west and many things to know.

So this article is a guide to How to buy Japanese Stock from Inside Japan.

Open a Trading Account

To start trading stocks in Japan, you will need to open a Japanese trading account. But you will need to be a Japanese national or have a Zairyu Card that proves your status as a foreigner living in Japan. 

Most Japanese stockbrokers don’t have English Language support for foreign investors. However, SBI Shoken and Ratuken Shoken have full English language support for foreign clients – a significant benefit.

You can click the links below where both companies talk about opening an account as a foreigner.

Another option is the Line Smart Invest app, which is available through the famous app Line – which most people use in Japan. Line Smart Invest aims to make trading stocks easy for those who have little experience of the financial markets and little to or experience investing in stocks.

The platform uses sophisticated UI that reduces investment barriers. Furthermore, the platform sees itself as a better alternative to standard investment pages, which are cluttered with information – which is very confusing for a novice investor.

You can invest in various themes, including women’s fashion, drones, cosplay, and much more. It’s a good idea to invest in something you’re passionate about or have an interest in. The benefit of obtaining theme-based investment stocks with a minimum of 100,000 yen mitigates stock price volatility. It also provides an excellent opportunity for asset building.

There is an alternative, which is to buy stocks through an international broker. Some international brokers gave clients the potential to trade Japanese stocks with no commissions. 

Many American stockbrokers offer ADRs (American Depositary Receipt), equity security created for investing in foreign companies from the United States – it might be cheaper to do this instead of investing with a Japanese broker.

It’s essential to conduct research and due diligence to find the option for you.

Finance your Trading Account

If you are living in Japan, you probably have a Japanese bank account. You will need a Japanese bank account to send funds to your trading account to begin purchasing stocks. SBI Shoken and Ratuken Shoken have lists of some of the central banks in Japan.

One of the best benefits of trading with the Rakuten Group is the online bank, which can link straight to your Rakuten trading account – that is an excellent convenience and offers group benefits. 

Suppose you’re looking to invest in other markets worldwide? In that case, you might want to use an excellent international broker because they will have a strong understanding of the global markets such as Hong Kong, Singapore, and London.

Not all Japanese stockbrokers are experts in international markets, but they are specialists in the Japanese Stock Exchange. You should take that into account when deciding on a Japanese stockbroker or an international one.

Buying stocks

So you’ve completed the first steps towards investing in stocks in Japan. Now you have a livestock trading account with an excellent Japanese stockbroker or an international stockbroker. 

Japan is a diverse market with powerful industries such as automobiles and electronics, which they export worldwide on a gigantic scale. These stocks are top-rated for foreign investors because of the stability of these industries. But you can also invest in other sectors such as food, textiles, and pharmaceuticals, which are powerful industries in the Japanese market. 

You can now select the stock that you want to buy. The number of stocks that you can buy is different depending on the company. However, a general rule of thumb is if you’re going to buy stock with a unit price of 1000 yen, you’ll need 100,000 yen in your trading account.

When you want to invest in a stock, you can enter a ‘Sashine’ (指値) order where you state your price and patiently wait for the market to exchange at your price. Another option is a “Nariyuki” (成行) order, a Japanese style market order, where the cost of your immediate stock fill is defined by the current market price. 

Selling stocks is very straightforward. You need to set the time and price, and once that has reached, you will have a deal. And you will either earn a profit or a loss. 

There is a critical point to note if you’re investing in Japanese markets. If you gain or lose money on your stock investment, you will have to report it in the annual earning declaration. This declaration will determine how much tax you have to pay to the Japanese government. If you make or lose a small amount – they’re unlikely to know. But you shouldn’t ignore this process regardless. 

If you have a Japanese stockbroker who can provide English language assistance, they will likely inform you about this. And the same goes for international brokers that deal with foreign markets. 

Conclusion

The critical aspect of investing in Japan is getting a broker that understands the Japanese market well or a broker from within Japan that offers English translation and guidance. If you can speak Japanese, you will have far less stress investing in Japanese stocks. 

However, it is generally straightforward, and it’s a market with many great industries and investment opportunities. Investors tend to have a lot of success with many of Japan’s most notorious companies in technology, electronics, and the automobile industry.

Further Reading

https://linecorp.com/en/pr/news/en/2018/2421

https://financialpost.com/investing/foreign-investors-flock-to-japan-with-warren-buffetts-seal-of-approval

https://medium.com/@noristyle92/how-to-invest-in-japanese-stocks-for-expats-living-in-japan-334a6e787bee

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