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Japan could be about to enter a bold new revivalist phase, despite often being seen as the ugly sister of the Asian economies, wealth manager HFM Columbus has predicted.

The Kent-based investment planner states that after innumerable false starts and endless investor disappointments, domestic conditions suggest Japan may again be a serious contender.

Rob Pemberton, investment director at HFM Columbus, said: "Japan has been in a bear market for almost 20 years due to deflation. Japan has already gone through everything Ben Bernanke is attempting to curb in the US - stagnant consumer spending, the collapse of the housing market and so forth - but it appears things may be changing.

"Economically, it's been a big beneficiary of pan-Asian growth, the property market has bottomed and the banks are so ultra-cautious after their flirtation with bankruptcy in the 1990s that their exposure to the sub-prime fallout has been minimal."

Mr Pemberton added that as well as external factors there were also internal drivers of growth. "Due to deflation people in Japan have spent very little compared to in the Western world. While everyone else has been in debt up to their eyeballs, they have been quietly accumulating their savings. As prices are starting to go up, that's tempting people to spend again, which has bolstered home-grown companies and boosted the economy."

Mr Pemberton added: "The forward p/e is around 14 times, pretty much the same as the S&P 500. Price to book is around 1.5 times, while the dividend yield is above the 10-year bond yield, which is traditionally a bullish sign."

For Japanese exposure, Mr Pemberton favoured the £290m SG Japan Core Alpha fund run by Steve Harker and the £610m Schroder Tokyo fund managed by Andrew Rose. The SG vehicle in particular was first in the Japan sector over one and three years to 9 June with returns of 2.1 and 44.1 per cent respectively. The Schroder portfolio lost 7.8 per cent over one year but gained 13.2 per cent over three.

The last false dawn for Japan was in 2005, when a 40 per cent run-up in the market prompted an avalanche of Western investors. However, a slump followed over the next two years.

Mr Pemberton insisted this time around the situation is different. He observed the IMA Japan sector average over the last 12 months is no worse than UK All Companies and better than UK Equity Income.

"Year-to-date, it has markedly outperformed the UK sectors, which may largely be a function of the strong yen," Mr Pemberton said.