China restricts quant fund Lingjun in effort to boost market
China's stock exchanges on Tuesday said major quant fund Lingjun Investment had broken rules on orderly trading and barred it from buying and selling for three days, as part of wider regulatory efforts to revive market confidence.
Orders from Lingjun to dump stocks in early trade on Monday coincided with rapid declines in the benchmark indexes, the Shenzhen and Shanghai stock exchanges said, adding they would restrict the hedge fund's trading until Feb. 22.
One of China's biggest quant funds, Lingjun manages more than 60 billion yuan, the company says on its website.
Lingjun apologised for the negative impact in a statement on its website on Wednesday. The firm said it «holds long-term bullish views on Chinese stocks and will stick to long positions,» adding it will review the problems existing in transactions.
Chinese quant funds, which use derivatives and data-driven computer models, have already suffered from a steep market sell-off this year and government curbs on short-selling.
China's blue-chip index dropped to five-year lows early this month.
«Regulators are sending a clear signal that money should be handed to managers who profit from long-term investment, rather than swift trades,» Yang Tingwu, vice general manager of Tongheng Investment, said.
He said the punishment could accelerate redemptions in quant funds as investors would ask: «Who's next?»
A hedge fund manager who declined to be named said a three-day trading halt was not a huge problem for Lingjun, but was a further blow to confidence in
