Japan's stock market has gone from being the most expensive in the world to the cheapest, according to JP Morgan’s David Mitchinson.

Mitchinson, who runs the £152 million JPM Japan fund, says the recent market turmoil which saw the Nikkei index shed over 20% in a week has left hundreds of companies at extremely attractive valuations. He argues the slump was mostly down to chronic lack of confidence and the gloom and doom approach of scared investors.

He told Citywire: ‘Last week people were thinking that the cycle was bottomless, but today they think there is a chance to survive – that’s how extreme it has become. However, if you buy when the markets are down, you can get some really good returns.

‘Japan has gone from the world’s most expensive to the world’s cheapest. You can find hundreds of stocks trading below net cash. We are seeing valuations that are at the lowest they’ve historically ever been,’ he said.

During last week’s stock market capitulation, Mr Mitchinson was so excited by the valuations on offer that he sold some of his more defensive stocks to take a more aggressive strategy. After only a week, he said, the results had already been extremely rewarding.

‘Last week as the market slumped we sold quite a few defensive stocks and became much more aggressive. We’ve been buying financial stocks, industrial control companies and internet stocks. Some of the stocks we bought last week are up 30%,’ he said.

Market uncertainty setback for Gartmore 

The volatility convulsing global markets claimed another scalp last week when Gartmore decided to postpone the launch of a new fund for respected European investor Roger Guy.

Guy and his co manager Guillaume Rambourg were due to launch the European Absolute Return fund for UK investors on 31 October as the first of a range of absolute return products planned by the group.

The European ban on short selling which was introduced in various European countries last week was also cited as a further reason to defer the launch.

Gartmore Head of UK retail Richard Pursglove told Citywire: ‘This is an investment–driven decision and we take it against the backdrop of unprecedented market events.'

He said the short selling ban had been a contributory factor but that market uncertainty had been the overriding reason for the postponement.

Pursglove said a number of clients had been ready to invest in the fund and added:  ‘We have a new fund ready to go but thought it would be prudent to pause and reflect with all the market uncertainty around us.'

He said the group would wait for market conditions to become more benign before setting a new date for the launch.

Norwich Union is the latest group moving beyond traditional fixed income investing to launch two less constrained bond funds for Dominic White and Chris Higham of Aviva Investors, the UK-based asset management arm of Aviva plc. 

The Norwich Strategic Bond Fund will have a portfolio of between 60-80 stocks and gives the managers the freedom to invest in a blend of up to 100% high yield bonds, 50% emerging market debt and up to 80% investment grade bonds.

The Norwich High Yield Bond Fund will invest in 50-60 stocks across European and US high yield markets, but will also has the ability to take advantage of opportunities in both investment grade and emerging markets.

Roger Webb, head of credit portfolio management at Aviva Investors said: ‘We believe that fixed income markets provide many opportunities to add value through active management. Extreme recent volatility means that most of the assets in our universe are now offering extremely attractive returns for investors.’