HONG KONG, July 24 Reuters Chinese computerdriven quant hedge funds suffered heavy losses in the first half of the year, underperforming traditional stocks strategies at home and other popular global fund strategies, data shows.

That dismal performance is leading to a reshuffle in the 200 billion industry, prompting some to even exit their businesses, market participants say.

WHY IT39;S IMPORTANT

Fastgrowing quantitative funds are in the regulatory crosshairs as Beijing attempts to restore retail investor confidence.

Global investors are watching to see if these funds can recoup losses following February39;s market turmoil, known as China39;s quant quake, and stricter oversight over trading practices, including curbs on shortselling and highfrequency trading.

BY THE NUMBERS

Quant hedge funds trading China39;s onshore Ashares suffered an 8.6 loss in the first half of the year on average, which contrasts with their 3.2 gain for the full 2023 year.

Those tracking the smallcap CSI 1000 Index were hit harder, dropping 14. In contrast, onshore equity hedge funds faced a 3 loss, according to China Securities.

By June 2024, there were 30 quant hedge funds in China overseeing assets over 10 billion yuan 1.37 billion, down from 32 at the end of 2023, according to PaiPaiWang Investment and Management data.

CONTEXT

Quantitative funds, which use computer algorithms and leverage, delivered strong returns over the past few years despite a market downturn, owing to bets on…