Investing in Japan may, finally, be on the cusp of a sustainable turnaround analysts say - although warning signs are still highly visible.
In the same week as Tokyo's key Nikkei 225 index hit a four-year high, Jeff Atherton of Insight Investment says he is looking for performance from stocks heavily dependent on the domestic economy. Profitability is increasing and a pending election could give a mandate for further economic reforms.
Simon Ward, economist at New Star, says higher company profits are feeding through in terms of rising consumption, while banks are dealing with falling bad loan numbers. However, Ward warns Japan's politics could still `wrestle defeat from the jaws of victory` if electors give power to the current opposition, which has pledge to tighten fiscal policy at a time when this would effectively knock the wind out the economy - as happened in 1997.
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