Mr Rose, who has covered the Japanese market for more than 30 years, said the biggest difference in markets this time was that major high level changes had occurred.
The manager said a huge monetary stimulus package from the Bank of Japan had been launched following the election of prime minister Shinzo Abe.
He said the forthcoming elections to the upper house in July also looked set to be positive.
But he pointed out that this was the thirteenth time the Japanese market had rallied in excess of 20 per cent and that it was still at a low level compared to other international markets.
“This one is different in some important respects,” he said.
“In the past six months there has been a change in government, a change of regime at the Bank of Japan, and there are chamber elections in July – it’s change at three key institutions.”
The manager said there was a strong possibility that this was not just another false dawn. “It’s not guaranteed, but the chances are better than they have been in a long time,” he said.
Two beneficiaries of this “reflationary” environment have been financials and property companies.
Mr Rose holds the bank Sumitomo Mitsui Financial Group and the insurer NKSJ Holdings in his top 10, but said that overall he was neutrally weighted in financials.
Within that figure, the manager is slightly underweight banks and slightly overweight insurers, which he said had proved to be the wrong way round as banks had unexpectedly rallied.
Mr Rose’s other play has been on the weaker yen. The currency has depreciated by nearly 30 per cent against the dollar since January, reaching its weakest level in more than four years. This has benefited the competitiveness of exports, particularly the fund’s top holding Toyota, which like other auto manufacturers had lagged the international market.
A contrarian investor, Mr Rose increased the fund’s holding in Toyota last year when the yen was stronger.
“It’s moved more quickly than I thought it would – more than 20 per cent in the past six months,” the manager said, adding that while he believes the yen could weaken further still, he expects the pace to slow.
“Japan was one of the most reluctant participants of monetary easing – now it is the most enthusiastic,” he said. “Investors are jumping on the bandwagon, which makes me slightly wary.”
