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From Sagar Chakraverty, Opalesque Asia:

Investor sentiment is dampening on the back of rising inflation rates in China, which climbed to 2.7% in February from 1.5% in January, causing grave concerns amongst global and domestic investors that interest rates will be pushed up soon by the People's Bank of China (PBC).

The government aims to hold inflation at 3% this year but according to a WSJ report, the World Bank anticipates that Chinese inflation will reach 3.5% to 4% in 2010; while the economy will grow at 9.5% in 2010 (GDP grew 8.7% in 2009). However, the yuan has been deliberately undervalued to help the Chinese exporters maintain lower prices in international markets.

"China will have to choose either to let the yuan rise or allow inflationary pressure to build domestically," the World Bank said.

It will be interesting to see what investment opportunities that will open for the Asian-focused hedge funds industry getting affected in 2010.

The mid-long term growth story of China is intact In an interview with Opalesque earlier this week, James Liu, Deputy Chairman and Deputy CIO of APS Asset Management, a Singapore-based fund management firm, said: "As such, the mid to long term trends in China will continue to offer plenty of investment opportunities......................

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