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Parts of the Japanese stock market can provide equity investors with a shelter from high oil prices, but as the country moves to position itself as the world’s workshop for energy-efficient technology, managers have suggested different ways to exploit the sub-sector.

As the most energy-efficient nation in the G8 for many years, Japan now preaches a "waste not" doctrine to its fellow members. In the 1970s, its economy was thrown into turmoil by successive oil shocks, and it has since committed to reducing its own demand for the resource by investing heavily in nuclear power and creating energy efficiency technologies.

Many would expect the spiralling oil price and last week’s G8 announcement of a global 50 per cent carbon emissions cut by 2050 as signs that the sub-sector could provide some relief for the beleaguered market.

Bottom-up stock picker Philip Whittome, who manages the £69.6m Japan fund at Investec Asset Management, says: "Investors looking to park their money somewhere internationally that could benefit from high oil prices might want to look at somewhere that is creating energy-efficient technology and has an economy that is hit less hard by high oil prices - Japan certainly fits that bill."

However, the manager says some energy-efficient technology producers are suffering from extreme share-price volatility.

"As soon as you identify such companies, they become terribly over-sold and a bubble begins to grow," he says. "Before you know it, the share price has crashed back down, and a lot of people have lost a lot of money."

Mr Whittome says firms providing batteries and energy storage devices have been popular in recent months. He says power-cell developer GS Yuasa, which has benefited from the sale of hybrid cars, saw its share price almost double between 31 April and 19 June 2008, before falling back by 22 per cent. Last week, it was trading on a price-to-earnings ratio of more than 20 times.

Japan’s prime minister Yasuo Fukuda sought to position his country as an energy-efficiency world leader during a speech in June. He said the growing global consensus that averting climate change is a priority for all nations "will assure an international competitive edge to Japanese technology related to energy conservation and the environment".

Simon Somerville, manager of Jupiter Asset Management’s £194.7m Japan Income fund, has also been looking at efficiency plays in the world’s second-largest economy.

"Honda has been a big winner in the US recently because of the low fuel consumption of many of its models," he says. "In a falling market, they have been producing positive sales growth.

"I am also keen on Yamatake, which is a leader in environment control systems for buildings. However, it has only performed in line with the market over the last year. It has not been a disaster, and I still have high hopes for it."

The manager also holds efficient boiler manufacturer Miura, which has struggled in recent months because of a shortage in supply of natural gas.

But where energy-efficient technology for overseas buyers may not be providing much uplift for Japan managers' portfolios, the high oil price is leading to growth elsewhere.

Mr Somerville says: "It's a matter of looking for companies that aren't exposed to raw materials, the global financial crisis and the strengthening yen."

"Railway companies are benefiting from the high oil price. More people are seeing the train as an alternative to driving, and there is also some evidence that fewer people are taking overseas holidays."

Over two years to 4 July 2008, the Investec fund has fallen by 20.8 per cent, while the Jupiter fund has dropped by 12.3 per cent. Both funds outperformed the IMA Japan sector average, which fell by 22.1 per cent. The funds are ranked 21st and fifth, respectively, out of 55 in the peer group, according to Morningstar.

Recent months have seen Japan’s president propose a ban on energy-inefficient light bulbs in the home by 2012. Workers have also been encouraged to wear short-sleeved shirts rather than use office air-conditioning during the warmer months.

Such moves will doubtlessly help the country on its crusade to reduce its environmental impact. But whether international investors believe Japanese companies can make money out of the trend is yet to be seen.