A wave of online brokerage account hacks in Japan has led to around ¥100 billion ($710 million) in fraudulent trades since February, Bloomberg reported. Indeed, criminals are using stolen accounts to artificially inflate thinly traded stocks worldwide, which benefits early buyers who sell at the higher prices. In response, some Japanese brokerages have restricted the purchases of certain stocks. It is worth noting that these hacks are making people worry about how safe Japan’s financial system is and could hurt the government’s plans to get more people to invest for their retirement.
It certainly does not help that one woman lost about 12% of her portfolio when her Rakuten Securities account was hacked, only to be told by police she was not technically the victim. Another investor said he lost ¥50 million after his account was used for risky margin trades without his knowledge. In many cases, firms like Rakuten, SBI, and others said they would review each case individually but stopped short of promising that customers would be paid back. Meanwhile, Japan’s Financial Services Agency is telling firms to start using mandatory multi-factor authentication and handle cases “in good faith.”
Interestingly, cybersecurity experts think that the hackers are stealing login information using phishing scams and malware, with attacks like “adversary-in-the-middle.” In addition, Japan’s reliance on web browsers for trading, which are less secure than mobile apps, makes the problem even worse. Therefore, as hacking cases rise, not only are more people losing trust, but they are also feeling stuck between risky online platforms and costly traditional brokers.
Is EWJ a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on iShares MSCI Japan ETF stock (EWJ) based on 116 Buys, 61 Holds, and seven Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average EWJ price target of $91.21 per share implies 27.8% upside potential.
