Radio Free Asia (RFA) recently reported that the Shanghai and Shenzhen Stock Exchanges have adjusted their information disclosure mechanisms, ceasing publication of daily net trading volume data and other data starting from August 19. This has cut off information on the flow of foreign funds into China’s A-shares market through the Hong Kong markets. Thus, it is now impossible to calculate the flow of foreign capital in and out of Mainland China.
Under the new reporting mechanism, the Shanghai and Shenzhen exchanges will not let investors know the net buying and selling data of the overall northbound (direction of mainland) funds or the flows for the top ten active stocks on a given day. The Hong Kong Stock Connect program has been adjusted accordingly.
The RFA quoted a scholar saying that data on foreign investment in China are critical long-term indicators that play an important role in observing the Chinese economy. The Chinese government understands that making the data regarding the country’s stock market more opaque will only lead to faster withdrawal of foreign capital from China, yet it has still taken this step, showing that there must not be much foreign investment left in the Chinese stock market. It seems that China is preparing measures to prevent the further withdrawal of foreign capital. This is just like how China stopped disclosing unemployment data when the unemployment rate was rising sharply.
The new disclosure mechanism makes it easier for the government to fabricate market data in accordance with its political and economic needs, influencing retail investors who do not have a full picture of the market.
Source: RFA, August 19, 2024
https://www.rfa.org/mandarin/yataibaodao/jingmao/ec-stockmarket-foreigncapitalwithdraws-08192024053127.html