The Japanese economy expanded by 1.1 per cent during the last three months of 2009, which could interest hedge funds.

The Japanese economy expanded by 1.1 per cent during the last three months of 2009, which could interest hedge funds.

This results in an annualised growth rate of 4.6 per cent, although the economy as a whole shrank by five per cent over the period.

As a consequence, Japan has remained the world's second-largest economy, although China is predicted to overtake the country to take this position in the future.

At present, Japanese nominal gross domestic product (GDP) for 2009 is at $5.1 trillion (£3.25 trillion) compared to China's $4.9 trillion.

Japan has become reliant on exports and external demand in order to maintain recovery, which has contributed to the economic growth.

Earlier this week, Threadneedle China Opportunities Fund manager Gigi Chan claimed that Chinese markets are inspiring awe in hedge funds.

He said that they are also the cause of uncertainty, with many investors unsure over whether the government's actions will negatively impact on economic growth and demand for foreign goods.