(Bloomberg) – Recently, two of the country’s leading online brokersannounced that they will virtually eliminate commission fees for stock trading regardless of account balance for users aged 20-25 in Japan.
By offering special offers to young people, brokerage houses see an opportunity to try to get people through the door who could become future paying clients, according to Michael Makdad, analyst at Morningstar Inc. in Tokyo.
The 25-year age limit is designed to “minimize cannibalization” of existing businesses. None of the popular international apps like Robinhood or eToro are available in Japan, leaving the field open.
Still, there’s a long way to go before investment becomes part of cultural DNA like in places like the United States. of stagnation. It took about 30 years for the local market to recede towards the top.
It’s something that even those who are prime targets for new offerings, like Shiori Shigeno, a music student in Tokyo who works part-time in a stock-picking.theme bar, are in mind.
A screen displays financial information inside Stock Pickers, an advice exchange bar for investors, in Tokyo, in early March.
The 21-year-old’s first purchase as a first-time investor couldn’t have been smarter – four shares in one of Japan’s largest banking providers, Mitsubishi UFJ Financial Group Inc., for around 3,000 yen ($ 27) – the equivalent of two breakfasts outside.
Yet when she told her parents, they were worried. “They think it’s synonymous with play,” said Shigeno. “My mother told me to be careful – people my parents’ age are careful, because of what has happened in the past.”
Cash accounts for more than half of household assets in Japan, according to recent Bank of Japan report investigation, despite the fact that interest rates have remained below 1% for over 25 years. Less than 10% of wealth is invested in stocks, compared to 33% in the United States.
There are signs the pandemic-inspired trade boom has spread from the United States and is starting to touch Japan. Individual investors so far accounted for 23% of trading volume in June, according to Tokyo Stock Exchange data, up from 16% in February 2020. Rakuten Securities Inc., another large online brokerage in Japan, mentioned about two-thirds of new accounts opened in the three months ended March were for people under the age of 30.
Competition between brokerage houses has made investing more accessible. As a general rule, Japanese stocks must be bought in minimum lots of 100 stocks, which requires a lump sum that is beyond the reach of most young people. It’s only in recent years that some new digital brokerages have made it easier to invest in smaller volumes (although the old limits still apply to many traditional brokerages).
Tomohisa Ishikawa, director of the macroeconomic research center at Japan Research Institute Ltd., says he believes a change is underway.
“Before, it was difficult to get these people to move away from saving and more to invest. Now they are more eager to buy stocks, ”Ishikawa said, adding that young investors in particular are increasingly educated. “They know what the average dollar cost is and they understand what it means to diversify your assets. “
We are a long way from the United States, where there is concern that the growing popularity of day trading will cause people to take excessive risks with their money. Movie theater operator AMC Entertainment Holdings Inc., for example, was on the verge of bankruptcy just a few months ago and is now thedarling of retail traders. The stock itself has gained nearly 2,500% this year despite warnings from analysts that stocks are not worth at all near their current trading level.
Shigeno says she intends to continue investing, even though her shares in Mitsubishi UFJ are down just over 1%. She says music-related stocks are next on her list. it does it anyway Feel rather lonely at times.
“I don’t have any friends around me to talk to about investing – only one started after I told her about my experiences,” she said. “It’s difficult for them to take the first step.
Before he’s here, he’s on the Bloomberg terminal.