Lyxor Asset Management, an investment arm of Société Générale, said it may start investing more in Japanese hedge-fund managers next year as it expects a rebound after the recent sell-off in the country’s stock market, according to Bloomberg.

Lyxor, which invests its money with some of the 110 hedge-funds clients whose accounts it manages, is “underweight” Japanese stocks and short US dollars, said Stefan Keller, Paris-based strategist, at the firm, the news agency said.

“It could be very soon that we will be more positive on Japanese equities, something that should happen in the first quarter 2010 given the valuation gap, given the exchange rate,” Mr Keller was quoted as saying in an interview. “We can allocate more to Japanese long-short equities managers, that would be a part of the shift, which we can implement quite easily.”

Japanese markets have lagged behind many of their peers this year. For example, the Morgan Stanley Capital International Japan index of shares is down by 0.6 per cent since the start of this year, contrasting with the MSCI Pacific ex-Japan index, which has surged by almost 58 per cent.