The Childrenâ??s Investment Fund, the $9.5bn London hedge fund, is betting heavily on falling share prices in Japan by taking short positions in big companies there totalling more than $1bn.

TCI, which last year lost a bitter fight over corporate governance at J-Power, the Japanese power company in which it held 9.9 per cent, is betting on share price falls in companies ranging from the electronics groups Sony, Sharp and Olympus to Mizuho, Japanâ??s second-largest banking group, and Bridgestone, the tyre maker.

The fund has a large short position worth Y39.5bn ($397m) in Toshiba, the electronics conglomerate, which represents 4.179 per cent of the groupâ??s outstanding shares, according to regulatory filings.

The large short positions could expose TCI to the risk of losing significant sums if the market continues its recent strong run, although it is unclear to what extent they are balanced by undisclosed long positions in Japan or elsewhere.

New Japanese rules introduced in December force the disclosure of sizeable short positions.

TCI, founded by Chris Hohn, on Thursday disclosed it had retreated from efforts to transform Deutsche Börse, selling most of its 10.26 per cent stake five years after it became the German stock exchangeâ??s most vocal shareholder.