The excitement for Chinese equities after the unreal stimulus, ECB’s OMT, and Fed’s QE-Infinity has already ended. Shanghai Composite just closed at new low again, making the divergence between Shanghai and S&P 500 as glaring as ever, as the chart below shows (March 2009 rebased to 100).

 

Either the flash manufacturing PMI was not bad enough to spur more stimulus hope, or people discover as we did that PBOC’s balance sheet is shrinking relative to the economy, or whatever.