Quant Models Went Haywire as Chinese Stocks Crashed and Rallied

China’s quantitative hedge funds are admitting to unprecedented failures by their stock-trading models during one of the wildest two-week stretches in the market’s history.

One manager described it as the industry’s “biggest black swan event.” Another said its models “switched from doing it right to getting it wrong repeatedly.”

While historical data on China quant returns is limited, all signs point to record underperformance for such funds — a shock that Man Group has compared with the “quant quake” that wreaked havoc on US managers in 2007.

Leading quants each managing more than 10 billion yuan ($1.4 billion) lagged the ...