In a significant move, China has announced it will stop providing real-time data on stock market flows from Hong Kong to Shanghai and Shenzhen, a key measure of international investment sentiment towards its market. The decision, set to take effect in roughly a month, was disclosed by the mainland's stock exchanges late Friday. Going forward, turnover details will be shared post the daily trading session.
This adjustment is intended to bring China's reporting standards in line with those of other major global exchanges, which typically do not offer intraday real-time data for specific investor groups nor differentiate between domestic and international investors in their data release practices.
The change is seen as another step by Chinese officials to stabilize a market that has been rocked by declining retail confidence and the pullback of foreign investors over the last year. The departure of international funds, in particular, has been blamed for deepening market slumps, prompting calls for the obscuration of intraday flow data.
Analysts, including Yan Kaiwen from China Fortune Securities Co., suggest that while investors will lose a critical insight into market movements, this move encourages a shift towards more long-term investment strategies. It represents regulatory efforts to guide market focus away from short-term fluctuations.
Comparatively, Taiwan's exchange releases foreign stock flow data once daily, while South Korea provides these details in real time with greater detail. Additionally, the mainland exchanges will continue to publish data on exchange-traded fund purchases and the day's top 10 traded stocks after the market closes, maintaining the current level of transparency in these areas.
Real-time data on the usage of the daily quota for the northbound connect programs, which allow for significant daily flows between the markets, will now only be disclosed when over 70% of the quota is utilized. This comes amidst observations of minimal quota usage in recent trading sessions.
Previously, intraday data had been scrutinized for signs of intervention by state-backed entities from Hong Kong, known as the National Team, which had significantly invested in the domestic equities market earlier in the year. This shift in data disclosure also affects how foreign ownership of individual companies through the trading links is reported, moving from a daily to a quarterly post-five-session disclosure, while daily updates on mainland investors' holdings in Hong Kong stocks will persist.
