William Kay: After so many false dawns, is the Japanese market beginning to shine?

It has been long awaited and oft predicted, but Japan may at last be on the upturn. If so, it opens up an area of the world investment scene that has in effect been closed to foreigners for more than a decade.

It has been long awaited and oft predicted, but Japan may at last be on the upturn. If so, it opens up an area of the world investment scene that has in effect been closed to foreigners for more than a decade.

Michael Wood-Martin, the fund manager specialising in Japanese equities at Henderson Global Investors, has just returned from one of his frequent visits east. He reports that the Tokyo government authorities seem to have got their act together, forcing banks to write off billions of pounds in bad debts and focusing more closely on keeping the economy growing.

Meanwhile, corporate confidence is rising and there is more activity in mergers and acquisitions, an activity that has traditionally been fraught with cultural obstacles, not least fear of losing face.

The upturn in the economy means that Japanese banks, many of which were teetering on the edge of collapse not so long ago, are awash with cash. Local insurance and pension funds have, like their British counterparts, apparently come to the end of a prolonged period of forced selling of Japanese shares. And deregulation of Japanese securities markets is making it easier for everyone, foreigners included, to get back in on the action.

These hopeful signs are backed by hard fact. Japanese unemployment is falling, wages have stopped falling, overtime is up and so are company profits. Exports are surging, especially to China, which is acting as a major engine of recovery in Japan as in several other countries in Asia and Australasia. Export revenues are feeding into the domestic economy, pumping up demand. That might even create a little inflation, which would be like a shot of oxygen to many moribund enterprises.

Are there risks? Certainly. This might be another false dawn that peters out as the economy falls back into its long coma. And the smart money is already in there: the Nikkei stock market index has risen by 50 per cent since last March, compared with a 37 per cent recovery in the FTSE 100 index.

So bets placed now will be on this being the basis for a sustained move forward, rather than on getting in on the ground floor. Too late for that, alas. But, remember, Japan is the world's second-largest economy. It has tremendous power, if it can only get itself in shape to unleash it. And it is worth putting the Nikkei's recovery in context: it is still less than a third of its all-time peak.

Unless you have a broker with excellent contacts in Tokyo, I recommend plugging into Japan through the dozens of funds available. According to Money Management magazine, Fidelity Japan Special Situations is the only one which has been consistently in the top division since 1999.

* A pat on the back for Barclays bank. After all the flagellation the nasty, hairy banks have had to bear lately over their bloated profits, it's a pleasure to say something nice about one of them.

I had to pay a cheque into my Barclays account at its branch in Bishopsgate, in the City - not my normal perch. I was met by a friendly lady greeter, who quickly diverted me from the queue waiting to get to the counter. She politely pointed out that my cheque could be paid in using Barclays' express envelopes, showed me how to fill in the forms - and even licked the envelope for me. Then she took me over to the internal postbox and posted it. I walked out into the sunshine so full of the joys of spring that I put 10p in the nearest charity box. All heart, that's me.

Another wrist slap for split capital

John Tiner, head of the Financial Services Authority (FSA), is tightening the screws on the hapless providers of split-capital investment trusts, and brokers who peddled them. But I question whether it is going to bring a penny piece any nearer, any sooner, to the investors who lost their savings down this plughole.

Last Tuesday Mr Tiner hauled 21 split-cap organisations to the FSA's dauntingly clinical headquarters in London's Docklands. After he told them that his 60-strong team had amassed 780 files of evidence, put 51,000 records on a database, listened to 27,000 taped conversations, visited 17 sites and held more than 70 interviews, he dropped some hints about what his ferrets have ferreted out. Mr Tiner gave them until 16 March to cough up compensation and give wayward employees six of the best.

This smacks to me of bluff. If Mr Tiner could have put the cuffs on them, he should have done so. This bunch has had the chance to make voluntary restitution, with the hardship fund set up last year by Daniel Godfrey at the Association of Investment Trust Companies, and most gave it two fingers.

The agonised sounds you may be able to hear reflect Mr Godfrey's Herculean efforts not to shout "I told you so" from the highest roof.