Foreign hedge funds thrive in China despite strict rules

Shanghai

HUNDREDS of foreign hedge funds and traders are working in a regulatory grey area in China, using speculative trading strategies that are complicating regula-tors' efforts to calm the country's turbulent stock markets.

Interviews with more than a dozen foreign hedge funds, proprietary traders and consultants reveal foreigners are active on a large scale in Chinese stocks, despite tight investment rules designed to limit their activities.