SHANGHAI/BEIJING, Feb 6 (Reuters) – China's stock exchanges are...

SHANGHAI/BEIJING, Feb 6 (Reuters) – China's stock exchanges are restricting share selling by some hedge funds, four fund managers and a broker said, in the latest attempt to stabilise a market that has slumped to five-year lows.

Authorities have put in place several measures to support the languishing stock market – including restrictions on net selling by mutual fund managers and curbs on short-selling – but have so far failed to stop the market slide.

They appear to be now targeting the private fund sector, particularly hedge funds using quantitative trading strategies that typically involve short-selling.

"Our line was unplugged," a quant hedge fund trader in southern China said. Orders to sell stocks on the fund's broking platform were declined, he said.

A sales executive for hedge funds at a large Shanghai-based brokerage said exchanges had called brokerages and asked them to curb selling by hedge funds. He said his quant fund clients were shocked to find they could not sell.

Another hedge fund manager in northern China said his firm could tweak positions but wasn't able to reduce holdings much, due to guidance from regulators.

Such window guidance – or unofficial, unwritten policy – would likely result in losses, said the source, who is not authorised to speak to the media.

Reuters could not independently verify how many hedge funds were given this kind of guidance nor how their brokers' trading platforms were implementing the restrictions.