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Finance

Online trading grows at record pace in Japan's bear market

Bargain hunters on track to open 500,000 accounts in January-March

Many of the new stock investors opening online trading accounts are in their 30s or younger, brokerages say. (Photo by Keiichiro Sato)

TOKYO -- The recent turmoil in Japan's stock market has sparked a record influx of users at online brokerages as new investors seize on the sell-off as a buying opportunity.

Among them is a 26-year-old office worker in Hiroshima Prefecture, who opened a Rakuten Securities account in mid-March.

After this month's plunge, "stocks don't look so overvalued anymore," the worker  said, explaining that he began researching stock investment after last summer's uproar over a government report suggesting an average couple will need a 20 million yen ($180,000) nest egg in retirement

Rakuten Securities, a unit of e-commerce group Rakuten, topped 100,000 monthly new accounts for the first time in February, reporting the most of any brokerage in Japan, online or otherwise. Many of these customers use other group services, such as Rakuten's online marketplace and credit cards. The brokerage anticipates a roughly 30% jump from February this month.

The Hiroshima man is typical of the wave of newcomers. Rakuten reported that 70% of its recent new users are novice investors and that 60% are in their 30s or younger.

The trend is a windfall for online brokerages, which lured customers away from traditional rivals early on with convenience and low fees, but have seen sign-ups slow down as the shift online has run its course.

 

SBI Securities, the country's largest online trading house, expects to attract about 130,000 new users in March. Matsui Securities, au Kabucom Securities and Monex Securities all expect sharp increases as well.

Signups are surging at an even faster pace than after the 2008 global financial crisis. Total quarterly account openings at these platforms and Rakuten -- excluding Monex, whose user numbers fluctuate more sharply due to acquisitions -- are poised to exceed 500,000 for the first time this quarter.

Dormant accounts are also returning to life. A 27-year-old Tokyo office worker who opened a trading account years ago is now using it to invest about 1 million yen, pouncing on perceived bargains.

Retail investors were net buyers of Japanese stocks for six straight weeks through last week, according to Tokyo Stock Exchange data.

Interest is growing in services that let customers invest a set amount on a regular basis, including through the tax-exempt NISA program. Monthly contributions to such plans at SBI have jumped 30% over the past three months to more than 20 billion yen.

At Rakuten Securities, such investments have doubled since the end of March 2019 to about 17 billion yen. "Our customer base has become less swayed by market conditions," said President Yuji Kusunoki.

Converting newcomers into long-term, buy-and-hold investors will be a challenge. "There are a lot of individuals who sell when stocks rise and buy when they fall," the head of a major online brokerage said.

Older investors became jaded during the long tail of Japan's asset-price collapse. At the end of December 2019 -- 30 years on from its all-time high -- the Nikkei Stock Average still languished about 40% below the peak of 38,915 scaled on Dec. 29, 1989.

SBI and Rakuten Securities are partnering with regional banks and independent financial advisers to provide investors with in-person advice. Monex Securities offers a "Life Plan Simulator" that gives users information on building wealth over the long term.

Au Kabucom is focusing on improving its mobile investing services through a partnership with its top shareholder, wireless carrier KDDI.

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