This September the IMF forecast that the Japanese economy would grow by 2% this year and by as much again in 2006, which would make 2003-06 the country's best period of growth since the economy began stagnating in 1990.
Foreign investors have also started to pay attention. Japan equity funds have attracted a net $1.5 billion in inflows since the end of July, according to Emerging Portfolio Funds Research, a fund flows tracker. Data from State Street also show near record inflows.
But perhaps the best example of the new strength of conviction was Nomura's London roadshow this September, the first it has held for Japanese equities in 15 years.
Nomura highlights the fact that Japanese companies are now showing their fourth or fifth year of profit growth and argues that corporate earnings growth is sustainable.
Corporate governance improvements are a key driver of many of the positive trends in corporate Japan. Japanese companies, argues Nomura, have become more shareholder friendly than before, dramatically increasing their total returns to shareholders in recent years, through increased dividends as well as share buybacks. They have also become more prudent in their capital expenditure plans.