Growing quants

There’s been a growing trend of quants trying to make superior returns against benchmarks from the highly inefficient Chinese stock market. And the quant models, algorithms that they developed are very different from the established hedge funds we have in the US.

The key driver is Chinese retail investors, the moms and pops which dominate the trades by more than 80%. The quants are trying to understand the behaviour of retails investors to gauge the sentiment – what do they like, what do they no longer like, what’s their mood etc. All these through structured and unstructured data – online posts, tweets, chat rooms, ie social media.

Here’s the Bloomberg article that explains in more detail about this trend. Interesting indeed.

I wonder how different my career would be had I continued being a quant analyst which what I started of as. But I was in London then so the market is more developed and more receptive towards quant methods, unlike Malaysia. I came back after 1 year and applied some of the techniques but managed to develop only screening tools. Fund managers were still relying on fundamentals in choosing stocks.