Five Japan stocks to buy on recovery hopes

John Paul Temperley, manager of the Martin Currie Japan Alpha fund, reveals five stocks to buy on hopes the Japanese economy has bounced back after the impacts of the quake.

Japan's economy showed signs of a turnaround last week, when it issued its first positive GDP number since the devastating earthquake in March for the third quarter. However, economists did warn over the contagion impact of the eurozone crisis.

Temperley has made a 20% shift from defensive names into more economically sensitive areas in recent months, such as technology, machinery, car production, financials and real estate.

"Companies are already discounting a worst case scenario in terms of the eurozone crisis, but they are in a much better state than they were post Lehman's," he said.

"The US economy is improving, boosting Japan, but this has been overshadowed by the eurozone drama. Over the past six months the main headwinds impacting the Japanese economy have been easing. Now, Japanese share prices are trading 25% cheaper than they were in March this year, creating opportunities," Temperley added.

1. Nippon Electric Glass - Temperley owns the LCD glass producer, which has benefited from the end of an inventory correction in LCD TVs.

2. THK - The machinery manufacturer suffered a severe fall in orders six months ago but is seeing a much more positive outlook.

3. Honda - The automaker also saw residual fall-outs after the quake, but Temperley now expects these to be cleared by next spring.

4 & 5. Mitsubushi & MUFG Bank - Temperley has added to his positions in Japanese banks as he thinks the sector is very well capitalised compared to its European peers. "It is well funded to lend overseas, and is able to sustain lower credit costs because Japanese banks on the whole have been de-risking for the past 20 years."