Opening a trading account to invest in the Tokyo Stock Exchange from Vietnam can be an overwhelming yet confusing process. But with the right knowledge, it is possible to effortlessly trade the TSE in order to diversify one’s portfolio.
In this article, we deep dive into what it takes for international investors to invest in the Japanese stock market and how to go about it.
What is the Tokyo Stock Exchange
The Tokyo Stock Exchange is one of the largest exchanges in the world. It lists over 3885 companies which include 1,835 Prime, 1,443, Standard, 529 Growth, and 75 Tokyo Pro Market companies. Some of the well-known Japanese conglomerates that are listed on the Tokyo Stock Exchange include Honda, Sony, Toyota, and Mitsubishi.
The stocks listed on the TSE are divided into five broad sections:
- First section: Includes large companies
- Second section: Includes medium-sized companies
- Mothers: Includes emerging startups and high growth companies
- Jasdaq: Includes companies that are using unique or patented technologies
- Tokyo Pro market: Can be considered as a market for professional investors and it is also referred to as the J-advisor
What is the Nikkei 225?
The benchmark stock index for the Tokyo Stock Exchange is the Nikkei 225 which includes 225 blue-chip companies. The Nikkei 225, also known as the JP225, is the Japanese equivalent of the Dow Jones index.
It is a price weighted index, which means the stocks featured on the index are weighted according to their share price.
Since Nikkei 225 is the main index that is traded on the Tokyo Stock Exchange, it represents the current state of the Japanese economy. Due to the size of the Japanese economy in Asia, the Nikkei 225 is also a good indicator of the market sentiments in the East Asian region.
Previously known as the Nikkei Dow Jones Index, it was later renamed to the Nihon Keizai Shimbun before landing on the ‘Nikkei 225’ term. Note that the Nihon Keizai Shimbun, also known as, the Japan Economic Newspaper is responsible for calculating and overseeing the stock index.
What are the Nikkei 225 companies?
The total of 225 companies are spread over 35 industries and each stock on the index is measured depending on their performance.
The tech industry forms the largest weightage of the Nikkei index followed by the other industries including consumer goods, financials, capital goods, materials, utilities, and transportation.
Some of the many companies that are a part of the Nikkei 225 include Sony Group Corporation, Keyence Corp, Mitsubishi, Softbank, Fast Retailing, and Nintendo.
Factors that affect the price of Nikkei 225
Here are some of the top factors that can affect the price of Nikkei 225:
- Shares prices of companies: Since this a price weighted index, some of the stocks will have more weightage than the others. For instance, the tech industry has the largest weighted share in the index. That means any upwards or downwards trend in the industry could also lead to the Nikkei 225 price fluctuating.
- News: Regular economic as well as political news can move the price of the index in any direction
- Currency rates: The Nikkei 225 has an inverse relationship with the Japanese Yen. This in turn means that when Yen’s value depreciates, the index price may go up–and vice versa.
- Economic events: Any changes in Japan’s fiscal or monetary policies including interest rates, inflation, or unemployment rate can affect the Nikkei 225’s prices.
- Earning reports from companies: When companies, especially the ones that have high weightage in the index, release their quarterly or annual performance reports, it can end up impacting the index prices.
Steps to open a trading account in Vietnam for investing in the Tokyo Stock Exchange
While it's possible to trade the Tokyo Stock Exchange directly by trading individual stocks, the Nikkei 225 gives traders exposure to a whole basket of stocks at once. This, in turn, allows traders to not only spread their risks, but also reduce any impact on volatility. Transaction costs also get lowered as traders don’t need to trade multiple stocks separately.
Trading Nikkei 225 CFDs, allows traders to take up position on the index without owning the underlying asset.
Here are the steps to open a trading account in Vietnam for trading Nikkei 225 CFDs:
- Go to Blueberry Markets and sign up for a new live trading account
- Submit the required documents and wait for the application to get proceed
- Once the application is approved, fund the trading account. There might be a minimum deposit amount required, so it's important to check the terms and conditions before depositing the funds
- Download a trading software like MT5
- Open up the charting tool. Click on the new chart, go to Indices and select JP 225.
And that’s it. We are all set up to start trading.
Final words
Creating a trading account as a Vietnamese investor and diversifying one’s investment portfolio with Japanese stocks can seem like an overwhelming process. But with the right knowledge and trading partner, it is possible to navigate through the complexities of it.
Sign up for a live account or try a demo account on Blueberry. today.
Disclaimer:
- All material published on our website is intended for informational purposes only and should not be considered personal advice or recommendation. Traders should carefully consider their objectives, financial situation, needs, and level of experience before entering into any margined transactions.
