Shinzo Abe 2.0:Japan's economic hope?

Hong Kong (CNN) -- Shinzo Abe, Japan's one-time prime minister, may get a second chance at the job. After serving as the country's leader from 2006 to 2007, his Liberal Democratic Party looks set to return to power this weekend in national elections.

Some investors believe the second coming of Abe will be good for Japan's equity markets.

"Investors are pricing in...much greater monetary easing," said Ben Collett, head of Japanese equities at Louis Capital Markets in Hong Kong.

In mid-November, Abe called for unlimited monetary easing to jumpstart the economy. He also urged the Bank of Japan to raise its current 1% inflation goal to as much as 3%.

Since then, investors betting on an Abe administration have pushed the Tokyo Nikkei up by more than 10%.

Still, Collett doubts if Abe can deliver on his calls for more stimulus and thinks investors might not see action.

"That's just talk to get into office. He's putting a line in the sand. I don't know how he achieves it."

If anything, Collett believes Abe's timing is "quite fortuitous" and that Japan's economy has "hit bottom" and is ready to bounce back.

And if Abe returns to office, he is expected to push back harder against a rising China than his predecessors, if his previous assertive leadership style is anything to go by.

Asia's first and second largest economies have been embroiled in a months-long trade dispute because of rival territorial claims in the East China Sea. Both China and Japan lay claim to a small grouping of islands, known as the Diaoyu Islands in Chinese and the Senkaku Islands in Japanese. On September 11, Japan nationalized the islands causing an uproar in China.

In retaliation, Chinese consumers slowed their purchases of Japanese products. In October, Japan revealed its September exports to China fell more than 14%.

A stronger stance against China may rattle trade ties even more, Collett said. And that may also weaken Japan's currency, the yen.

"In fact, Abe's comments may be intentionally aimed at destabilizing sentiment on the yen," Collett added, noting that "anything that removes popularity of the yen as a safe haven" will be good for exporters.

Japan's economy relies heavily on exporters -- big-name brands that include well-known names Toyota, Sony and Panasonic. A weaker currency means Japan's exporters earn more yen when they repatriate overseas profits back to Japan. Since mid-November, the yen has weakened 5.2% as Abe's chances of returning to power have risen.

Still, while many economists are becoming more bearish about Japan's economy, which has just slipped into recession, Collett remains bullish.

"Japan has never looked better to me. I'm very, very optimistic on it," Collett said. "I'm hopeful for the market and the economy and Abe's timing is solid."

"He'll initiate a cycle of new industrial development -- a rebirth of heavy industry in Japan that includes energy, hi-tech, space exploration and defense industries."