LONDON, April 27 Reuters Investors are positioning for a regime change in global markets as the Bank of Japan edges closer to ditching the policies that depressed the yen for decades, thereby luring Japanese money back home.

The BOJ, by flooding its financial system with cheap cash and keeping interest rates below zero for years, turned its currency into the ideal funding vehicle and sent trillions of dollars of Japanese cash overseas in search of better returns.

It is now the last holdout in the global race to raise rates, but with Japanese inflation at multidecade highs, the yen has steadily strengthened.

That means portfolio managers are having to factor a stronger yen into global stock selection in way they have not for years, with some even anticipating mergers and acquisitions as the Japanese market revs up.

The trigger for the revaluation of the Japanese markets is higher rates and then a stronger yen. Its a market that has been undervalued for years and years and has been a value trap, said Carmignac39;s head of crossasset Frederic Leroux.

The yen has gained moe than 11 from 30year lows against the dollar hit last October , and roughly 9 from eightyear lows hit against Australia39;s currency last year .

Kazuo Ueda, who concludes his first twoday meeting as BOJ chief on Friday, has stressed the need for ultraloose monetary policy but also signalled the chance of raising rates to tame inflation.

Others expected more money to leave major bond markets that…