Investors seeking to buy local equities directly have to get approval from Chinese regulators, by obtaining a qualified foreign institutional investor license. Big players like Goldman Sachs and Stanford University have taken this route. Several years ago, the government began to expand the program, as part of an effort to overhaul its financial system.

As the market soared, many hedge funds rode the bull run, raking in profits and posting double-digit returns. At the end of the second quarter, Asia-focused hedge funds had $126.3 billion in capital invested, a record amount of money according to the research firm HFR.

The situation took a sharp turn in late June.

Chinese markets began to tumble, with stocks 30 percent off their highs at one point. By the end of July, the capital devoted to Asia-focused hedge funds had dropped by $10 billion as investors ran for the exits and losses mounted, according to HFR. Since then, it has continued to be shaky, with stocks in Shanghai down more than 6 percent on Tuesday.

Casting doubt on the market reform efforts, Chinese authorities have aggressively intervened to help stop the slide. Investors got blindsided by some of the measures, including a ban on “malicious short-selling” and forcing big investors to hold their shares for six months.

Stuck in limbo, hedge fund managers said they were unsure how they fared in the chaos. Stock market regulators suspended more than 30 different trading accounts, including one owned by the brokerage unit of Citadel, the $26 billion firm founded by Kenneth C. Griffin.

Then last week the People’s Bank of China abruptly devalued its currency, veering off script and raising fresh concerns about the economy. The central bank typically sets a daily midpoint for the currency, allowing the renminbi to trade within a narrow band. On Aug. 11, the initial price was roughly 2 percent lower, dropping 4.4 percent by the end of the week. The currency usually moves just a fraction of a percent.