Abstract: Recently, the China Finance 40 Forum (CF40) held a closed-door seminar on Quantitative Trading and Stock Market Volatility.
Quantitative investing, at its essence, is to replace human decision-making with mathematical models. Investment philosophy, financial theory, and computer are the three main elements. Quantitative investing mainly includes two types: fundamental and technical analysis. Quantitative trading in China originated in 2010 and, after explosive growth from 2018 to 2021, has now entered a stage of high-quality development.
The quantitative crisis at the beginning of 2024 could mainly be attributed to the homogenization of quantitative strategies, which also reflected underdeveloped risk management, valuation pricing, and regulation functions in China’s capital market. The quantitative crisis and the abnormal fluctuations in the market have the same root cause. Only by continuously encouraging value investing and long-term investing can the Chinese market fundamentally avoid crowded trading and stampedes.
Experts at the seminar proposed recommendations for future development, regulation, and institutional reform for the sector, pointing out that to make the market healthier and more stable, it’s necessary to reposition the development model of quantitative funds and improve the supervision and trading systems.
