Emerging markets such as those in Asia hold a lot of promise for hedge funds, an expert has claimed.

Emerging markets such as those in Asia hold a lot of promise for hedge funds, an expert has claimed.

Chris Palmer, Gartmore's head of global emerging markets, has highlighted the strong start that these countries have had to 2010.

He said that the shrinking impact of the Chinese government's stimulus package is leading many investors to feel cautious about the last two quarters of year.

"Further growth in China has become a source of concern for Asia's manufacturing companies hoping to take advantage of China's cheaper labour force," he added.

Mr Palmer pointed to a record rise in the minimum wage for the Guangdong province, suggesting that Chinese manufacturers are going to see more overheads in the form of wage bills.

Hedge funds could become increasingly worried about their prospects in the country following news that its Consumer Price Index has risen 2.7 per cent year-on-year.

UBS economist Tao Wang claimed that the government could react by raising interest levels.