How to invest in Japan stocks and the Nikkei 225

The Japanese stock market is home to some of the world's most famous companies, such as Sony, SoftBank, Nintendo, Mitsubishi, Honda and Toyota, all of which trade on the Tokyo Stock Exchange (TSE/TYO).

The leading Japanese stock index is the Nikkei 225, a price-weighted index that tracks 225 of the largest stocks on the TSE.

Despite years of underperformance due to Japan's "Lost Decades" economic crisis, the Japanese stock market has bounced back in recent years and the Nikkei 225 is up 71.89% over the last 5 years (as of November 2024),¹ making it increasingly popular with international investors.

1. Buy Japanese stocks directly

In Japan, publicly-listed companies mainly trade on the Tokyo Stock Exchange (TSE/TYO), but some trade on the Nagoya Stock Exchange (NAG), with derivatives traded on the Osaka Exchange.

In order to buy Japanese stocks, you'll therefore need an account with a trading platform that lets you access the Tokyo Stock Exchange.

When buying international stocks from Australia, you'll generally be charged both a brokerage fee and a currency conversion fee.

When picking a share trading platform to trade Japanese stocks, it's important to take both fees into account in order to find the most cost-effective.

You should also be aware that many Japanese stocks require you to buy in lots of 100 shares at a time. This means you won't be able to buy single shares, and may also be limited in what stocks you can buy, depending on the stock price and your available capital.

Which trading platforms offer Japanese stocks?

There are a few share trading platforms that offer direct access to the Japanese stock market.

CMC Invest offers $0 brokerage on Japanese stock trades, though you'll need to pay a currency conversion fee any time you buy or sell.

Interactive Brokers also offers Japanese stocks, with brokerage from US$1 and competitive currency conversion fees.

You can also trade Japanese stocks on CommSec, which has a brokerage fee of JPY¥1,500 or 0.40%, whichever is greater, and an FX fee of 0.55%.

2. Invest in a Japan stocks ETF on the ASX

If you're looking for broader exposure to the Japanese stock market or the Nikkei, you could invest in an ASX-listed ETF that includes Japanese stocks.

Buying an ASX ETF has two main benefits over buying individual Japanese stocks. It means you can avoid having to pay currency conversion fees when you buy and sell, and also helps diversify your portfolio.

There are two major ASX ETFs that track the Japanese market:

• iShares MSCI Japan ETF (ASX: IJP): year-to-date performance - 11.12%
• Betashares Japan ETF – Currency Hedged (ASX: HJPN): year-to-date performance - 14.59%

You should be able to buy these ETFs via any trading platform that offers access to ASX ETFs.

There are also international ETFs that offer access to the Japanese market, such as the iShares MSCI Japan ETF (NYSE Arca: EWJ).

What is the Nikkei 225 index?

The Nikkei 225 index — also called the Nikkei Stock Average or simply, the Nikkei — is one of Japan's leading stock indices. It's a price-weighted index that tracks 225 blue-chip stocks traded on the Tokyo Stock Exchange across 36 industries.

The index has been calculated since 1950 and is named after the Japan Economic Newspaper, Nihon Keizai Shimbun. It is Asia's oldest stock index and is often regarded as the Japanese equivalent to the Dow Jones Industrial Average.

Frequently asked questions

• Is it a good time to invest in Japanese stocks?

  After decades of decline due to Japan's ongoing economic stagnation, the Japanese stock market has bounced back since 2012. The Nikkei 225 index hit 40,000 points for the first time in 2024, up from a low of around 7,560 points following the global financial crisis.

• How do I invest in Japanese stocks?

  You can invest directly in Japanese stocks via trading platforms like CMC Invest, Interactive Brokers and CommSec.

• Which Japan ETF is best?

  There are two main Japan ETFs available to trade in Australia - the iShares MSCI Japan ETF (ASX: IJP) and Betashares Japan ETF – Currency Hedged (ASX: HJPN).

Written by

Thomas Stelzer

Publisher

Tom Stelzer is a publisher and writer for Finder, covering investing and cryptocurrency. He previously worked for Finder as a writer in Australia and the UK, covering things like personal finance, loans, investing, insurance as well as small business and business loans. He has a Master of Media Arts and Production and Bachelor of Communications in Journalism from the University of Technology Sydney. See full bio