(Yicai Global) Sept. 8 -- An employee at Tianyan Capital, a large Chinese hedge fund manager that is almost 40 percent up this year, confirmed to Yicai Global that the company has suspended fundraising after the chief of the country's main securities regulator discussed the pros and cons of quantitative trading.
A worker at Tianyan Capital said to Yicai Global that the online rumor of the Shanghai-based firm deciding to halt fundraising yesterday is true. Initiated projects will be completed as planned but no new transactions will be accepted, the person added.
Quantitative and high-frequency trading, relatively common techniques in mature capital markets, can easily cause issues such as increased volatility, homogeneous strategies, and unfairness but they also enhance asset liquidity and pricing efficiency, Yi Huiman, chairman of the China Securities Regulatory Commission, said during a keynote speech at the annual meeting of the 60th World Federation of Exchanges on Sept. 6.
A we-media article with the headline of "quantitative trading contributed half of the turnover on the A-share market" went viral on Sept. 3 among Chinese investors. One of them said that quant trading is an "artificial intelligence-driven harvester" that targets qualitative traders.
The investment landscape is getting heated. The combined turnover of the two mainland markets topped CNY1 trillion (USD154.8 billion) for the 35th straight trading day to tally CNY1.4 trillion yesterday. In the 35 days, the total is about CNY47.5 trillion (USD7.35 trillion), marking the highest figure since the bull market of 2015.
Tianyan Capital is not alone. Evolution Asset Management said on Sept. 3 that it has suspended fundraising for its algorithmic trading products. Before this, PE funds Minghong Investment Management, Qilin Investment, JinGe Asset Management, and Xingkuo Investment Management reported similar moves.
Founded in 2014, Tianyan Capital mainly uses quantitative trading methods. The firm manages assets exceeding CNY30 billion (USD4.6 billion), public data show.
Tianyan Capital’s rate of return this year reached nearly 37.9 percent as of Sept. 1, ranking No. 2 after Shanghai-based MingShi Investment among 20 quant funds with transaction value surpassing CNY10 billion in China, according to financial data site Simuwang.Com.
Editor: Xu Wei, Emmi Laine, Xiao Yi