IT’S exactly the kind of shock that many hedge fund managers feared as they mulled whether to bet big against China’s currency.

In a surprise statement Friday night, the People’s Bank of China announced a rule tweak that will make bearish yuan trades much more expensive. The move, which sparked a sharp rally in the currency, echoed efforts to deter short sellers almost three years ago. It also underscored why hedge funds have largely avoided wagers against the yuan in recent months, missing out on one of the world’s most profitable currency trades.

While China’s slowing economy, rising debt risks and escalating trade war with Donald Trump are all pointing to a weaker exchange rate, memories of a dramatic government-engineered short squeeze in early 2016 are still too fresh for many managers to risk getting caught in a repeat.

Even Crescat Capital’s Kevin Smith, a long-time China pessimist, trimmed his bearish positions in recent weeks to lock in profits as the currency sank toward a 15-month low.

“Nobody dares to intensely build short trades,” said Tommy Ong, managing director for treasury and markets at DBS Hong Kong Ltd. (SD-Agencies)