Hedge funds investing in China have seen this year’s big gains eroded by the recent market selloff, highlighting the downside of investing in an environment where managing risks is difficult and government actions are unpredictable.

Chinese shares in Shanghai and Hong Kong were hit by selling again on Tuesday, following a three-day rebound. The benchmark Shanghai Composite Index fell 1.2% and is down 24% from its seven-and-a-half-year high hit on June 12.