DeepSeek effect? How China’s quant funds thrive amid tight regulatory scrutiny
China’s quantitative investing sector has produced 18 funds managing more than 10 billion yuan (US$1.5 billion) in assets each so far this year, underlining the industry’s ability to generate competitive returns despite a tight regulatory environment. The firms are among 159 Chinese hedge funds overseeing more than 10 billion yuan in assets each, riding the technology-driven momentum in the…
China's quantitative investing sector has seen the emergence of 18 funds, collectively managing over 10 billion yuan (US$1.5 billion) in assets this year, despite facing a stringent regulatory environment. These firms are part of a larger group of 159 Chinese hedge funds each overseeing more than 10 billion yuan in assets, capitalizing on the technology-driven momentum in the world's second-largest stock market.
Among the newcomers to this exclusive club are AXQ Capital, Hopeseek Fund, and Huanian Fund, as reported by financial data provider Wind.
Christopher Beddor, deputy China research director at Gavekal Dragonomics, observed that many quant funds are currently performing exceptionally well. He attributed their success to the less sophisticated onshore equity markets in comparison to major global markets, allowing quant funds to generate solid returns through systematic trading strategies initially developed abroad.
Gary Ng, economist at investment bank Natixis, highlighted the increasing appeal of hedge funds among Chinese investors, driven by low deposit rates and weak real estate performance.
Access to quant trading services has become more accessible, with Chinese brokerages like Sinolink Securities and Shenwan Hongyuan Securities promoting quant trading features through their mobile applications. However, despite their competitive returns, quant funds operate in a complex regulatory environment in China. While Chinese financial regulators are deeply invested in market outcomes, they are also capable and willing to intervene if they perceive actions that could contribute to market volatility.
This potential for regulatory crackdown was notably illustrated by DeepSeek, a fund backed by High-Flyer Quant, which the policymakers recognized as a significant step in acknowledging the potential of the fund industry in technological development.
As of the end of August, Chinese private securities investment funds, including quant funds, managed over 9 trillion yuan in assets.
Written by urgent.news from SCMP Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
This story
This is one outlet's version. Read the fullest account.
