But appearances can be deceiving.

Early earnings results for the fourth quarter do paint a depressing picture, with electronics group NEC Corp (6701.T), major brokerage Daiwa Securities (8601.T) and electronics firm Sharp (6753.T) all bleeding red ink.

Carmaker Honda (7267.T) warned of a worse-than-expected slump in annual profit while camera-maker Canon (7751.T) also gave a weak outlook and bid farewell to its president.

Even Super Mario could not rescue Nintendo (7974.OS) from the funk, with the videogame company this week forecasting a bigger-than-expected loss for the full year.

Electronics group Sony (6758.T), a big exporter, is expected later on Thursday to show it is heading for its fourth consecutive annual loss. And the news is expected to be gloomy, too, from another currency-sensitive rival, Panasonic (6752.T).

And the signs are clear that the pain will continue, thanks partly to the yen, which has surged against the currencies of major trading partners the United States and euro zone by 7 percent and 13 percent, respectively, in the past 12 months.

But for a nation so down on its luck, brokers are remarkably no more pessimistic on Japan than some other mature markets such as Hong Kong and Singapore, and some are simply amazed that many Japanese firms are managing to eke out profits at all.

Overall, brokers have a neutral stance on Japan's benchmark Nikkei 225 index .N225, roughly in line with Singapore, Hong Kong and Australian stock markets, according to Starmine data.

Over the past 30 days, despite a seemingly endless stream of bad news for investors in Japan, brokers have issued just as many buy recommendations on Japan as sells. In Hong Kong and Australia, sells have just outnumbered buys.

Brokers are paid to be optimistic, but many investors are not yet throwing in the towel, paying an average of 13 times forecast earnings for Nikkei stocks compared with around 10 for Hong Kong stocks and a shade above 11 for Australia shares.

The Nikkei is near the bottom of the ladder in terms of performance among major markets over the past six months, but it has still bettered Taiwan and China.

Ordinarily, these comparisons would be unremarkable, but Japan has had a dreadful run, especially since March 11 last year when a magnitude 9.0 earthquake and tsunami devastated its northeast coast, killing more than 22,000 people.

Ports, roads and rail lines were destroyed and a nuclear crisis ensued, the world's worst in a quarter of a century, which then led to power rationing that forced factories to cut back production. That was against the backdrop of an already-stagnant economy, hamstrung by paralysis on the reform front.

"Bearing all this in mind, you look at the profits and go 'wow, it's incredible what these guys can do'," said Nicholas Smith, strategist with CLSA in Tokyo, who last week issued a research report on Japan entitled "Apocalypse not now."

BROKERS WOULD SAY THAT, WOULDN'T THEY?

In detailing the tragedy and misfortunate that has befallen the Japanese people and their long-suffering stock market, Smith almost runs out of breath.

"You've had one of the biggest earthquakes in human history, one of the biggest tsunamis, you've had (the equivalent of) three Chernobyls and you've had the floods in Thailand, which is one of the biggest overseas production bases for the Japanese...," he said. "Plus, you've had the yen: since 2007, it's moved all the way from 100 to 75."

It's bad, no question, but so far this earnings season, Japan has done no worse relative to expectations than Europe, with 63 percent of the Nikkei having missed forecasts versus 66 percent of the STOXX Europe 600 .STOXX, Starmine data shows.

Some traditionally defensive sectors in Japan have fared relatively well, notably healthcare which, overall, has delivered profits around 8 percent higher than market forecasts.

Even one of Japan's most cyclical industries, retail, showed some pluck. Fast Retailing (9983.T), Asia's top apparel retailer, beat forecasts despite a balmy autumn and the nation's biggest brokerage, Nomura Holdings (8604.T), reported a surprise return to profit in the latest quarter.

A big reason, though, that foreign investors have not completely given up on Japan is the strong yen.

In U.S. dollars, the Tokyo market's average forecast earnings per share have so far fared much better than Europe's since the beginning of 2011 and have almost kept pace with London's FTSE index .FTSE and the global MSCI index .WORLD.

European investors, with their battered euro, appear to have stopped beating a retreat for now from the Tokyo market.

"In Europe, there appears to be very little interest in Japanese equities among end investors, and almost no capital flowing into Japanese stocks," Mitsubishi UFJ Morgan Stanley said in a research note last Friday.

"However, many of the institutional investors that we visited in Europe last week said that investors have been pulling out of Japanese equity funds since 2011 and that this is unlikely to continue for much longer...While foreign investors seem unlikely to keep buying large amounts of Japanese stocks, we also expect to see relatively little selling."

CLSA points out Tokyo has actually served value investors quite well until 2009 and says it should turn a corner soon, given that there is literally no goodwill left in the market.

The Tokyo market is trading, overall, at just 0.9 times book value, near an all-time low, according to the brokerage.

For example, Apple Inc (AAPL.O) is now worth much more than the combined market value of all of Japan's storied electronics firms: Canon, Nintendo, Sony, Panasonic, Toshiba (6502.T), Hitachi (6501.T), Mitsubishi Electric (6503.T), Fujifilm (4901.T), Fujitsu (6702.T), Sharp, Tokyo Electron (8035.T) and Hoya (7741.T).

To Kengo Nishiyama, strategist at Nomura Holdings, the yen continues to hold the key to Japan Inc's immediate prospects.

"A recovery in corporate profits should be easier to assess when the direction of currency rates becomes clearer." he says.

In the meantime, Japanese firms will be back to a task they know only too well from the last 20 years: cutting costs.

"Never underestimate the ability of the Japanese to count paperclips," says CLSA's Smith.

($1 = 76.25 Japanese yen)

(Additional reporting by Nathan Layne and Dominic Lau in TOKYO; Writing by Mark Bendeich; Editing by Matt Driskill)

• A Permanent Economic Emergency