Last week, China decided that enough was enough with the stock selling.
Two months of (virtually) uninterrupted plunge protection amounting to some CNY1.5 trillion along with a series of directives and threats had failed to stop the market’s harrowing descent and so, perhaps fearing that its rather aggressive posturing wasn’t being taken seriously, Beijing started arresting people.
As documented exhaustively here, the crackdown on “subversives” led to more than two hundred arrests and forced confessions. There was Xu Gang, the CITIC executive. And CSRC official Liu Shufan. And let’s not forget poor Wang Xiaolu, the Caijing reporter who, clearly under duress, made the following public confession after suggesting in a story that China’s plunge protection team might be considering an exit from the market (which is of course true): “I shouldn’t have released a report with a major negative impact on the market at such a sensitive time. I shouldn’t do that just to catch attention which has caused the country and its investors such a big loss. I regret . . . [it and am] willing to confess my crime.”
The sweeping accusations so frightened one fund manager that, after being summoned by the authorities, he told a friend who works at CSRC the following: “If I don't come back, look after my wife.”
One high profile “summons” involved Li Yifei, chairwoman of Man Group’s China arm. Here’s what we said late last month:
"Chinese authorities took Li Yifei, chairwoman of Man Group Plc’s China unit, into custody to assist with a police probe into market volatility, according to a person familiar with the matter.
Li assisting with the investigation doesn’t mean she is facing charges or has done anything wrong. She has led Man Group in China since November 2011, according to her profile on LinkedIn. The person asked not to be identified because the probe isn’t public."
We suspect maybe this was the mistake:
In an interview with Bloomberg Television’s Stephen Engle in November, Li said investors and regulators in China were beginning to understand hedge funds.
"The Chinese investors and regulators are beginning to understand that actually hedge fund is about hedging."
Yes, "actually hedge fund is about hedging," which, as Citadel learned earlier this month, would "actually" be fine as long as by "hedging" Li means "buying" or any other activity which leads equities higher. Always higher. Never, ever lower.
http://www.zerohedge.com/news/2015-09-08/chinese-hedge-fund-manager-denies-she-was-arrested-was-merely-meditating