Overview

• Beijing's crackdown on private sector activities aims to support flailing Chinese stock markets, including restrictions on short-selling and quant trading.
• The measures have led to frustration among traders and are likely to deter investor appetite, with China's stock markets having lost trillions since their peaks in 2021.
• Chinese hedge funds face abrupt trading restrictions, with regulators monitoring transactions in person, as part of efforts to halt a $4 trillion selloff in stocks.
• The crackdown on quant funds and short-selling raises concerns about China's commitment to market transparency and could drive away international investors.
• Despite temporary stabilization of the stock market, the long-term implications of Beijing's heavy-handed approach may undermine efforts to attract global capital.