Japanese investors have long been known for their large, bullish bets on the Brazilian real through foreign-currency-denominated investment trusts (“toshins”) that invest in high-yielding assets like stocks and bonds.

The huge difference in interest rates between the two countries (0.1% and 9.0%) is what makes the toshins attractive to Japanese investors. But according to Nomura analyst Peter Attard Montalto (via WSJ), with Brazil’s government and central bank working aggressively to weaken the real, Japanese investors have pulled money out of the country in favor of the Turkish lira, South African rand and Indonesian rupiah.

We’ve seen a very large rotation by Japanese investors away from Brazil,” Montalto said.

These investors sold Y38.5 billion of toshins denominated in the Brazilian real in March. Outstanding Brazilian real toshin investments are still high, however, at Y4.716 trillion in March, according to Nomura.

With the recent depreciation of the Brazilian Real, most of the 111 toshin funds with a Brazil theme saw their net value drop considerably. While the Brazilian real still makes up the biggest chunk of assets under management in Japanese toshins, the Turkish lira and the South African rand are gaining in popularity, Nomura analysts said.

The Japanese investors remain a force in emerging markets,” said Nomura’s Montalto. “Policymakers in emerging markets know that, whether it’s in Turkey or South Africa.

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