For all the talk about Japan's struggling economy, the Nikkei is on top
Very few global equity markets are in positive territory this year in domestic currency terms and even fewer factoring the advance of the US dollar. But Japan is the exception as the market anticipates better days ahead.
In yen terms, the index is up 6.44% and in US dollar terms, it's up 5.23%.
The gains had been significantly larger but were cut down by the latest round of volatility.
Money managers are taking notice. From an index of more than 2500 funds, the Legg Mason Japan Equity fund is in second place this year.
I's managed by Hideo Shiozumi and he spoke with The Telegraph today:
I am extremely bullish, more so than earlier in my career, because the changes happening in Japan, not only in the economy but also in the financial markets, are unprecedented.
In the financial markets a "great rotation" is starting to take place, which will see Japanese pension funds boost their currently low exposure to shares at the expense of bonds.
This is a move encouraged by Shinzo Abe, the prime minister. Other reforms have put pressure on Japanese companies to become more shareholder friendly. The result should be that firms make more efficient use of their capital, including returning cash to shareholders in the form of dividends.
As well as more money coming into the market from institutions, which will help push share prices higher, individual investors are also buying for the first time. Last year Isas were introduced in Japan, followed by the launch of junior Isas - all part of Mr Abe's plan to shift money from cash to riskier assets in an attempt to boost the stock market and help stimulate economic growth.
Interestingly, he said he's less bullish on exporters and more excited about companies that benefit from more consumer spending and Japan's aging population.
