EPFR's Cameron Brandt sees money flow returning as investors look to re-invest

Brandt, the Director of Research at EPFR Global said it is likely that investors who were forced to liquidate positions due to the unwinding of the Yen carry trade are possibly looking to re-invest funds.

Japan's bond funds as well as equities are seeing inflows return, and there seems to be a process of 'repatriation' underway, Cameron Brandt of EPFR Global said on August 9.

In conversation with CNBC-TV18, Brandt, the Director of Research at EPFR Global said it is likely that investors who were forced to liquidate positions due to the unwinding of the Yen carry trade are possibly looking to re-invest funds. "We are seeing money flow back into Japan, where equities saw good inflows during the week", Brandt said, adding that India and China equities seem to attracting a part of these flows. "On equity side, India and China are getting a pass", he added. Latest bond fund inflows too were at multi-week highs in India and China.

Wall Street and Asian indices are higher on Friday, August 9, after US jobless claims showed fewer applications for unemployment benefits than what was projected earlier. This partly reassures investors over lingering US recession fears.

The flight to safety had intensified on Friday, August 2, after weak US economic data triggered worries that the US Fed may have been behind the curve in cutting rates and will now likely need to ease monetary policy aggressively to head off a recession.

To add to this, Bank of Japan’s rate hike on July 31 pushed the Yen higher, and the subsequent unwinding of the carry trade led to heavy selling in tech indices in US and the Asian region. However, Brandt said US equity bond funds and the tech sector is now seeing inflows despite the skeptical background noise of US recession fears, and declines were being bought into.