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While foreign investors are unlikely to be a major factor behind stock market swings, given their relatively low participation in the market compared with domestic players, they are seen as more politically vulnerable to investigations.

“The foreign fund community definitely feels like it is being monitored more carefully than it’s been in a very long time,” said one foreign fund manager.

“Nobody is pointing at you and saying you are doing anything illegal. But it’s enough to ask people to walk through all their trades, and ‘why is this account trading so much?’ That ramps up the pressure.”

Some Chinese believe the collapse in Chinese stocks was engineered by foreigners, and there has been speculation that it was caused by the U.S. government to embarrass China as the International Monetary Fund (IMF) considered including the yuan in its currency basket.

There are no signs yet the pressure has caused foreign funds to withdraw from the market altogether or pull out staff from the country.

But fund experts say there is a risk that if foreign investors feel intimidated enough that they can no longer employ trading strategies to allow them to profit from volatility, they may eventually have little choice but to leave, for the short term at least.

“This crisis has highlighted the need for a China-specific investment model. Simply porting strategies that worked in the U.S. is not feasible,” said Daniel Celeghin, a consultant to hedge funds as Head of Asia Pacific for Casey Quirk based in Hong Kong.

For Chinese funds though, the option to pack up and leave isn’t there, and if the volatility continues, the pressure on them is likely to intensify.

The “national team” fund manager said that as well as meetings with regulators, they are now calling him every day to ask how much he is selling and buying.

© Thomson Reuters 2015