More good news for Japanese stocks

This Sunday's election is likely to see a decisive victory for Japan's Democratic Party of Japan (DPJ), ending 54 years of rule by the Liberal Democratic Party.

This "can only be a potential positive" for investors, as Christopher Wood of CLSA puts it.

Political stagnation has hitherto hampered economic reforms, while the DPJ has "good instincts on releasing pent-up consumer spending and addressing problems in the labour market", says the FT.

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But while hopes for political change are often dashed, the reasons why Japanese stocks look appealing over the long term have nothing to do with politics. Unlike its Western counterparts, Japan's economy has already been through a credit bubble collapse.

Meanwhile, the Topix remains the cheapest major market on 1.2 times book value, compared to pan-Europe's 1.5 and the S&P 500's 2.1.