Why Japanese stocks are set to soar

After two decades of economic malaise, Japanese stocks are about to take off, says James Ferguson. Here's how to profit.

On 25 November last year, the Tokyo First Section (Japan's Topix index) opened at 704, only a shade above its March 2009 closing low of 701. Before that, the last time the Japanese stockmarket had been so low was in December 1983.

Since last November, however, Japanese stocks haven't looked back. They've risen by almost 19%, with the vast majority of that move occurring over the last five weeks. Chartists may not have noticed the three-year double-bottom a powerful base formation pattern because everyone gave up looking at the Japanese stockmarket (except for reasons of schadenfreude) a long time ago. But that could be a big mistake.

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James Ferguson qualified with an MA (Hons) in economics from Edinburgh University in 1985. For the last 21 years he has had a high-powered career in institutional stock broking, specialising in equities, working for Nomura, Robert Fleming, SBC Warburg, Dresdner Kleinwort Wasserstein and Mitsubishi Securities.