Pessimists argue that Prime Minister Abe's economic reform programme is running out of steam and that the good news about the Japanese economy is already in the overall price of the Tokyo stock market. What's more, the problems of very high debt and an ageing population haven't gone away.
But it seems these concerns aren't putting off domestic investors in Japan. Indeed, domestic investors are net buyers. They're buying their shares from gloomier overseas sellers. Since February 2016 foreign investors have made a net sale of $35.6 worth of Japanese shares, according to the FT. Yet the Topix has risen 40% over that period.
Topix index, year to September 2017
So why are domestic investors buying?
Well, one reason is ultra-low interest rates. The Bank of Japan left overnight interest rates unchanged at 0.1% this week and the bank is continuing with its QE programme of buying assets worth 80 billion yen each year. Strikingly, a new Bank board member, Goshi Kataoko, argued for even more stimulus, so a monetary tightening in the near future looks unlikely.
Another plus point is that many Japanese companies have plenty of cash on their balance sheets. In March of this year, Corporate Japan, excluding banks and insurance companies, had $1.7 trillion in cash and cash equivalents on its balance sheet. Much of this war chest has been accumulated since the financial crisis, and can now be used to invest in organic growth as well as acquisitions. And crucially overseas investment and acquisitions.
Japanese firms now do a quarter of their manufacturing abroad, according to Nikko Securities, and that means that the Topix and some other Japanese indices have become more global than some investors perhaps realise. Maybe not as global as the FTSE 100 - the Footsie isn't closely connected to the UK economy - but fairly global nonetheless.
I also suspect that the Yen may be weaker than you might expect over the next few years. One reason for that was highlighted in recent research by WisdomTree. The provider pointed out that tourism has been one of the fastest growing sectors of the economy in recent years and the government has set ambitious tourism growth targets for the next five years. A cheap yen will make it easier to hit those targets. And just as important, inflation stays stubbornly low, which gives the Bank of Japan little reason to raise rates. Of course, all other beings equal, lower rates should mean a weaker currency.
A weak yen is clearly good news for Japanese exporters and it's also good news for overseas investors who want to buy attractively priced Japanese assets.
If you want to invest in Japan via ETFs, have a look at our 'Guide to Japan ETFs'. One omission from that guide is that we didn't write about how you can invest in smaller or mid-cap Japanese firms via an ETF. There's one ETF that covers this market: the iShares MSCI Japan Small Cap UCITS ETF (LSE: IDJP). It tracks the MSCI Japan Small Cap Index which comprises 899 smaller stocks. It represents 14% of the Japan stock market universe.