China saw a record six months of outflows from the equity market until this month, while foreign direct investment is at a 30-year low.
Photographer: Raul Ariano/BloombergThe Big Take
China’s Quant Clampdown Risks Damaging Fragile Markets for Years
A sudden crackdown has sparked a frenzy as quant funds suffer losses.
Chinese hedge funds were looking forward to a holiday break from the market turmoil when trouble started brewing last month. One manager had his short-selling orders abruptly rejected by brokers. Another was cut off from the stock market completely. Regulators turned up on trading floors at multiple funds to monitor transactions in person.
As one fund put it, three sessions of chaotic trading “felt like a whole year to us.”