The Japanese market remains too important to ignore and is becoming increasingly attractive on many investment fronts, according to Stefan Bain, head of Japanese Equities at F&C.

Japan’s economy and the market remain primarily export driven, and to that end, Bain suggests that investment themes in the short-term are defined by the macro view.

However, investors in the region should be mindful of the     uestion of climate change and the need to lower carbon emissions through alternative energy sources and greater production efficiency.

Bain says, ‘Japan’s lead in many climate-change related technologies is perhaps not fully appreciated. From innovative materials to key components through to end products. Japan is carving out a commanding position in what may be the country’s next export growth driver.’

The region is also a leader in the automobile market and the country;s automakers are investing heavily to retain that position.

Toyota already dominates the market for hybrid vehicles, while Nissan is aggressively launching its new electric vehicle, The Leaf.

Additionally, components and new materials will drive the success of hybrid and electric vehicles. Bain points to Panasonic as an example of one company that is investing in battery cells.

Bain adds, ‘The current lack of enthusiasm for Japan is potentially one of the more powerful reasons to consider its stock markets right now. We are never fully comfortable when everyone in the room agrees with the wisdom of our point of view and right now Japan is clearly out of favour. We hear numerous managers exiting the market altogether, while global investors seem to have little interest in Japan as an investable market.’