The "Abenomics" experiment in Japan could herald a new dawn for its deflated economy and for long-suffering investors, says Scotland's biggest independent fund manager.

Sarah Whitley at Baillie Gifford, who has been managing money in Japan since 1982, told an investment forum in Edinburgh that for battle-scarred investors these were "exciting times".

The Japanese stock market is up 23% so far this year after losing an average 1% a year since 1990.

But she admitted: "People remain very sceptical, we have heard it all before, and it didn't happen the last time."

However, Ms Whitley, whose team has £3.6 billion in Japan largely for institutions, said the policies pursued by Japanese Prime Minister Shinzo Abe since his election last November were gathering momentum, and could be positive for the global economy and for investors.

In particular, Japan might now at last join the trans-Pacific partnership (TPP) free trade area after many aborted attempts in the past.

"It is a very serious effort. It seems to do all the things you can possibly ask, and the Prime Minister is more popular than when he was elected. One of the most surprising things was that when he agreed to join the TPP negotiations he became more popular. Most of Japanese society has worked out that being part of a large free trade area is probably a good thing."

Ms Whitley said: "The sentiment indices in Japan have picked up dramatically, they used to wobble along, now they gone almost vertically upwards. There is a unity of purpose to use this opportunity to get out of deflation and get the economy moving."

But on the fast gains for investors, she cautioned: "Japan started from a long way behind."

The forum staged by Baillie Gifford heard from Gerrard Callahan, manager of its UK Equity Alpha fund, that it holds several "world-class" Scottish businesses including Weir Group, John Wood, Aggreko and Wolfson – but not the banks.

Mr Callahan said: "Lloyds is quite big but where does it go from here once it is through this period of restructuring?"

He said even if the state-rescued banks regained all their previous level of profit they still had a huge debt overhang holding them back. "There are an awful lot more interesting things in the portfolio to think about," he said.