A brutal AI-stock selloff wiped out years of alpha generation in a matter of weeks, leaving the country's $385 billion quant industry with a lot of explaining to do. China’s quantitative hedge fund industry just lived through one of its worst months on record. Long-only quant funds averaged a 17% loss in July, a drawdown severe enough to erase not just recent gains but, in many cases, everything accumulated over the prior year. AdvertisementThe CSI 1000 Index, a broad gauge of smaller Chinese companies that quant funds often target, fell almost 20% in July. In the week ended July 17, a High-Flyer CSI 1000 index-enhancement product dropped 15.7%.