China trading-data restrictions are self-defeating

See less evil. Buying and selling shares in People’s Republic is about to get harder. This month Shanghai and Shenzhen stock exchanges said y would, as of mid-May, stop publishing real-time data of foreign investors’ tres into and out of domestic stocks. duo is presenting move as a technical change to bring m into line with bourses outside China. It smacks, though, of yet anor attempt to prop up sentiment.

current setup comes courtesy of Stock Connect, an almost dece-old system linking two mainland exchanges with ir peer in Hong Kong. It allows foreigners to tre domestically listed Chinese shares. rolling stream of live tring data has served as a high-profile measure of overseas demand ever since.

For most of past year or so, overseas investors have been pulling capital out of market. That’s at odds with Beijing’s efforts to pump up stocks, from curbing divestment by local funds to having state firms buy shares; one of m, Central Huijin Investment, poured at least $41bn into domestic exchange-tred funds in first quarter, Reuters reported.

A state-run newspaper, Economic Information Daily, first flagged in October possibility of curtailing real-time foreign tring data, pegging it to mounting outflows of overseas capital. It argued that reducing information could prevent ordinary investors from making decisions based on “partial or wrong understanding”. Those concerns appear to be back, with Stock Connect figures showing offshore investors on track to post net sales this month for first time since January.

Shanghai and Shenzhen now intend only to provide net daily flows after markets close. diminished transparency is b news for hedge funds and quantitative investors, which Beijing has long disdained, assigning m partial blame for a stock-market implosion in 2015.

Nine years later, se fast-money players have actually been among only sources of foreign inflows in recent months, trers have told Breakingviews. Global long-only fund managers are likely to interpret change as more evidence for ir lack of confidence in China’s stock market. And, perhaps worse for Beijing, China’s vast army of retail trers will lose crucial market intelligence on when foreign investors buy and sell stocks. Irking so many different s of shareholders is likely to le to more market ructions, not fewer.