Why China’s stock market is busted

If you want to know why the Chinese stock market is busted for good, here it is from Macro Risk Advisors via FTAlphaville:

Looking at stock connect, investors on the HK side have sold a total of 37.6 billion CNY of A-shares since July 6th when northbound volume reached a daily record of 13.4 billion (to sell). The below chart shows the amount of flow per day (a positive number means foreign investors were buying A-shares, a negative number means foreign investors were selling A-shares).

Selling has eased because Chinese authorities put a gun to everyone’s heads. But by doing so they’ve killed liquidity. What does that mean? Ask those holding China A-share ETFs from Bloomberg:

APS Asset Management Pte has halted the redemptions in two of its funds after the rout in China’s stock market led to the suspension of more than 1,300 companies on mainland exchanges.

The Singapore-based asset management firm stopped redemptions and subscriptions for the APS China A Share Fund and the APS Greater China Long/Short Fund, it said in an e-mailed statement Tuesday. “A significant proportion of China A share listed companies have recently suspended trading of their shares, and this unforeseen development makes it difficult to fairly determine” the net asset value of some of APS’s funds, the firm said in the statement.

They will remain halted “until the suspension levels come down and the funds’ NAV can be fairly determined.” APS will continue to accept new money and withdrawals for all other funds, it said. Given the rebound in the Chinese market, APS said it expects normal trading in the two funds to resume by the weekend.

What good is a stock market in which a pack of twitchy communists can prevent you getting your money out? Zero.