China's largest quantitative hedge funds, known for their success in beating the market through sophisticated statistical models, faced significant losses last month due to an oversight of a crucial factor: government intervention. This event, referred to as 'the quant quake', prompted a swift response from the Chinese government, which intervened by purchasing $45 billion worth of ETFs in the past two months, aiming to stabilize the market. This move is part of a broader effort to prop up the ailing stock market, with the government now owning approximately one-fifth of all equity ETFs and potentially increasing its purchases to $100 billion this year. In response to the market's volatility and the government's intervention, China's computer-driven 'quant' hedge funds, overseeing a $260 billion sector, are adjusting their strategies by enhancing risk management and aligning their portfolios with the state's definitions of fair play. This adjustment comes as regulators intensify their scrutiny, tightening regulations on listed firms and brokers to restore retail investor confidence and ensure the stability of the nation's $9.2 trillion stock market, as noted by EricBalchunas.