By metamorworks @ Shutterstock.com

In a long piece in the Financial Times, Leo Lewis examines Japan’s current ascendance and wonders if the country is truly turning itself around, or if this is one more false alarm. He concludes:

The problem with the “rising sun” thesis is that, in several cycles and across multiple decades, it has been rapidly followed by a decisive reversal as concerns around the shrinking and ageing population have resurfaced and derailed brief spurts of optimism.

Rallies are always strongest in Japan when there is a pro-reform regime in government and a perception that there will be action as well as words, say analysts at Morgan Stanley. It is still not completely clear that Kishida can deliver both.

In the meantime, there are a number of reasons to question the sustainability of the stock rally. As brokers point out, major global fund managers, as canvassed by the BofA monthly survey, remain underweight Japan. The recent six weeks of net buying has nowhere near offset the huge selling that persisted for most of the past six years.

Brokers point out that the buying spree that has propelled the Topix to its 33-year high has been passive money buying the whole index rather than active money seeking out the sort of stocks that represent particularly good value or likely activist targets.

“Global fund allocation has not actually changed,” says one broker at a Japanese house eager to see if CLSA’s conference will make a difference, and start the inflows of active money. “Will it change? Maybe. I wish them luck.”

Read more here.