Is this a New Dawn for Japan?

The Japanese stock market has experienced so many false dawns since the early 1990s that commentators are wary of being too optimistic about it for fear of being proved wrong again.

Mike Lenhoff, of Brewin Dolphin, the stockbroker, remembers being on several asset allocation committees that were wrong-footed by the Japanese stock market’s ability to stage an apparent recovery, which would then proceed to fizzle out shortly afterwards.
Mr Lenhoff says: “Each time the story differed. Each time it excited. Each time the weighting to the Japanese equity market was raised and the rebound chased, first in 1992, then in 1995 and again in 1998. But each rebound ended in disappointment.”
So it is with some caution that Mr Lenhoff notes that the Japanese stock market now appears to be breaking out of the range in which it has traded since the early 1990s. The Topix index, which has several times bumped up against the 1,700 level in the past 15 years, has now risen above it.
Does this mean investors can look forward to a genuine new dawn in Japan, or is it another false one? Mr Lenhoff is unsure but he says: “Our hunch is that the bear has lost its claws. The investment backdrop for Japan looks sufficiently different this time round to make us think that the equity market is in the process of overcoming the formidable barrier of resistance thast has capped its progress for so long.”
Tim Cockerill, of Rowan Group, an independent financial adviser, is also cautiously optimistic that things could be different this time. He says: “Economic growth is still strong, unemployment is low and companies are making good profits. I think there’s a 60/40 chance that we’ll see a decisive breakout this time.”