Quant fund interest in China has skyrocketed, an article in Financial Times contends. Last month, the quant titan DE Shaw applied for direct access to China’s financial markets. It’s the latest example of another quant fund lured in by the opportunities created by easier access, robust trading by Chinese retail investors, and better tools for hedging.

Though many hedge funds have taken the long bet on China, last year’s regulatory reforms granting QFII investors access to derivatives and removing restrictions on speculative trade have made hedging and shorting better. That’s generated a good deal of interest in China this year, with the ultimate draw the country’s retail investors. Industry insiders see those investors as easier to bet against, pointing to a lack of sophistication and failure to conduct comprehensive analyses.

As recently as 6 years ago, foreign traders were not so welcome in China, and short-selling was shut down completely. But after Beijing streamlined the QFII application process last year, 156 new investors have been approved. However, China’s financial press has started to ask pointed questions about foreign competitors’ impact, with local quants describing them as “the wolves arriving,” the article quotes from a story in the state-run Securities Times. However, with domestic quants still under-developed, those foreign competitors would be vulnerable if the market crashed, and would be the first to be blamed. The article quotes a Hong Kong-based hedge fund founder as saying, “[In China,] you don’t want to be too cutting edge.”