"The Nikkei was up 55 percent last year in yen terms... it had a very impressive year, so it's not surprising that we're seeing shorter-term profit taking but... opportunities are still quite good there," said Stephen Davies, CEO, Javelin Wealth Management, told CNBC Asia's Squawk Box on Thursday.
The Nikkei was down 3.3 percent by midday on Thursday in Asia, trading at 14,872.
(Read More: Nikkei's rout– Is it a signal to buy?)
Last year was a stellar year for Japan's financial markets, as Prime Minister Shinzo Abe put his ambitious plan for economic reform into practice, helping to revitalize investors' appetite for Japanese stocks the world over, while a rapid weakening of the yen substantially boosted profits for the nation's export-led economy.
However, doubts have arisen over whether the momentum will continue in 2014, and Japan stocks are down 8.6 percent this year so far. It's largely believed that a consumption tax hike scheduled for April will give Japan's economic recovery a knock, while Abe's commitment to the third arrow of his economic plan - structural reform - is also a common gripe. Abe has spoken at length of plans for corporate tax cuts and labor market reforms, but the market is yet to see any solid action.
Davies told CNBC that progress on this final arrow would prove vital to the success of 'Abenomics.'
"There is always a bit more room in the Japanese market to take advantage of the impact of a weaker yen, and that's all very positive, but in order for it to march higher and maintain those levels you need to see much more constructive action on the part of government," he added.
(Read More: Japan's Nikkei logs best year since 1972)