After innumerable false starts and endless investor disappointments, domestic conditions in Japan suggest it may once again be a serious contender, argues its investment director, Rob Pemberton in a new report.

“Companies have been big beneficiaries of Pan-Asian growth and continue to post double digit earnings, the property market has bottomed and the banks are so ultra-cautious after their flirtation with bankruptcy in the 1990s that sub-prime exposure appears minimal,” he said.

He said the forward price-earnings ratio on Japanese shares is around 14 times earnings, similar to that on the US S&P 500, while the dividend yield is above the 10-year bond yield, traditionally a bullish sign for stocks, he said.

“ Japan has struggled in recent years. In 2005, a 40 per cent run up in the market prompted an influx of western investors, who were left disappointed by a subsequent drop in the market.

“ Japan is currently so far away from the ‘hot’ money as to be positively glacial - yet perhaps surprisingly, it has not been quite the problem child for UK investors that it has been painted over the last year,” Mr Pemberton said.

Mr Pemberton currently recommends investing in Japan sooner rather than later: “In the right circumstances, active managers can add significant value over and above the index.”

HFM Columbus Group, the result of a joint venture between Weybridge, Surrey firm Hoyland Financial Management and Tunbridge Wells based company Columbus Financial Advisers, is designed to deliver expertise in financial planning. It aims at high net worth individual clients.