As fourth quarter kicks off, there's one market in Asia that has investors excited: Japan.
The world's third largest economy may be struggling to shake off the drag from the sales tax hike that took effect in April, but a weakening yen, improving corporate profits and attractive valuations will likely power gains in equities in the coming months, say strategists.
"We are going to get a combination of value meeting growth – the Japanese market is cheap – so there's value, and on top of that we are going to get earnings growth," said Jesper Koll, head of Japanese equity research at JP Morgan Securities Japan.
"[There will be] upward earnings revisions driven by stronger-than-expected top line growth and margin expansion. Corporate Japan has restructured and productivity is just about to explode," he said.
On a year-to-date basis, Japan's benchmark Nikkei 225 has lagged behind its peers, up just 0.7 percent.By comparison, India's Sensex and China's Shanghai Composite have risen 26 percent and 12 percent, respectively.
Koll's optimism was shared by several other strategists.
"We're overweight Japan. Abenomics is making progress, albeit slowly, the yen continues to weaken, which is good for stocks, and pension fund reform is a huge potential catalyst," said Simon Grose-Hodge, head of investment advisory, South Asia at LGT Bank.
China, India cheer
Asia's economic giants India and China are also expected to come out swinging, extending their solid gains so far this year.
Two catalysts providing gains in China's markets are the upcoming launch of the Shanghai-Hong Kong Connect scheme - which will give global investors greater access to domestic Chinese equities - and the Fourth Plenary Session - a meeting of the Chinese Communist Party's elite 200-plus-member Central Committee that is expected to focus on consolidating anti-graft efforts and deepening reforms for economic sustainable growth.