Buying Single Japanese Equities

It can be done!

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Last week we wrote a post about buying Japanese stocks. In it, we mentioned the minimum lot size for buying and selling stocks, which has been standardised at 100 shares. This makes it very expensive to buy shares in many companies.

However, there is an alternative way to buy shares that allows you to buy them one at a time.

Here is how it works at Rakuten, SBI, and Monex.

The key term seems to be ‘単元未満株式’.

Rakuten does have a system for buying single shares, but you can only buy shares that you already own. Better than nothing, but not particularly useful.

​SBI has the single stock option built into their order screen (see below):

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Pretty simple.

Monex has a separate order screen for the single share option, called ‘ワン株買’:
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Also pretty easy.

Other brokers and banks may also provide this option. Just look for ‘単元未満株’. A bit disappointing that Rakuten doesn’t match the others in providing this service, but to be fair I didn’t even know about this option a week ago 😉
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​Keep in mind though that for most people investing using passive index funds and automating their finances will yield better results, take less time, and be less risky than buying individual stocks.

One compromise is to keep most of your investments in indexes and have a small portion of your portfolio as ‘play money’ or ‘gambling money’. This is what I do. It allows me to be sensible with most of my funds while pretending to be Warren Buffett with a small amount.

How about you? Do you buy individual companies and stocks as part of your portfolio?

14 Responses

  1. The obvious questions are: 1) if it can be done, what’s the difference? 2) Why do you have to do a separate process?
    The answers seem to be:
    1. At the stock exchange normal trades throughout the day happen in batches of 100. Exchanges of less than that happen only twice a day. That’s when your small order will go through.
    2. The fee is probably higher. For example, SBI’s is 0.5% for small trades. Their normal fee for full batches is ¥50 for orders up to ¥50k. So on SBI it’s cheaper to sell individual stocks if the total price is less than ¥10k, or more expensive otherwise.
    Depending on how desperate you were for the stock – I’d say it’s not worth it. Probably better to save up the cash (or if you are getting stock grants, save up the stock) until it reaches a enough for a full batch, then do the trade. Double benefit of being a standard trade with low fee, and forcing you not to make an impulse decision.

    1. Yeah, I assume the broker is batching them and buying them in lots of 100 so they can break them up and give them to the customers.
      Apparently you also don’t get the shareholder gifts if you buy this way, although you do get dividends.
      Good point about the charges: they are actually 0.54% with a minimum of 54 yen for SBI, so slightly more expensive than a normal order.

      1. Not all brokers deal in odd lots. What your normal brokers do is aggregate any odd lot orders they receive then route these to an odd lot specialist broker for execution.
        Obviously, you’ll be hit with higher commissions as now your orders actually need to pass through 2 brokers before you get to the market.
        Keeping to indices is best.

  2. There’s also an app called One Tap BUY which lets you buy partial stocks in ￥1,000 increments. You can only choose from about 30 companies and the fees are 0.5%. You can also buy partial shares in US stocks too.

  4. In general, I would recommend investors not buy these small positions in Japanese stocks. This practice magnifies the disadvantages of high commissions in the Japanese market and it cuts you out of the “kabunushi yutai” (株主優待) which actually drives the price performance of some stocks in Japan and can be a significant part of the return for small investors. Most investors are best served by index funds and should avoid actively managed mutual funds or individual stocks. The Japanese market has a lower P/E ratio than the US market and many of us love living here, but for investors it has some significant handicaps so it should not be your primary investment choice.

      1. I see announcements to both effects on the JPX website so now I’m really confused.
        Suffice it to say, changing 売買単位 from 1000 to 100 is not easy as the change in static data will reverberate through to, and break some, downstream systems, not to mention any potential impact the change might have to position management systems.
        At any rate, the conclusion is still the same: Stay away from odd lots. Not all brokers handle odd lots and those who do are treated more like sewage cleaners by the big brokers (although with higher commissions), rather than as actual investment strategies or operations.

    2. Isnt that only in reference to trading foreign stocks? The Japanese unit has implications for Japanese companies because that is how shareholder benefit programs are organized but that would not apply for foreign companies.

  6. Ben, I agree with your recommendation. Even when I had my largest position of individual stocks, it was still a small percentage of my overall portfolio, and the remainder was in mutual funds.