Since its peak in 2007, the Shanghai Composite Index has fallen by 52 percent.

By Wolf Richter for WOLF STREET.

As of today, China’s stock exchanges have stopped publishing daily data on foreign capital flows. Capital flows are an important indicator of sentiment, and foreign investor sentiment is gloomy as China’s stock market has become a giant bottomless pit.

And foreign investors have been pulling their money out of Chinese stocks, including Warren Buffett, whose Berkshire Hathaway sold more than half of its BYD stake. Year-to-date, foreign investor capital flows into China’s stock market were negative through Friday, according to Bloomberg. To support the stock market, obviously weak data needs to be masked, and so these daily capital flow data are no longer published.

China’s stock markets have long been a horror show for foreign investors. Since its peak in October 2007, the Shanghai Composite Index has fallen by 52.5 percent. Today, at 2,894 points, it is back at the level it first reached in January 2007. Buy and hold forever?

“Beijing stopped the release because the data doesn’t look good and is volatile,” Xin-Yao Ng, investment director at abrdn Asia Ltd, told Bloomberg. “They probably don’t want the data to exacerbate capital outflows,” but “it doesn’t solve the root of the problem.”

The remaining ways to gain insight into foreign investors’ capital flows are now the quarterly reports on foreign investors’ financial assets, which are released with a delay by the People’s Bank of China. In addition to the long delays, they also measure the value of outstanding shares held by foreigners through broader channels rather than flows, Bloomberg said.

Chinese authorities have tried several times to prop up stock markets in various ways, using a “national team” of state-controlled institutional investors to buy and sell stocks, warning against “malicious” short selling and urging companies to buy back more shares, the PBoC increasing liquidity, etc.

Those efforts were evident again earlier this year, when government-controlled funds, among others, bought an estimated $66 billion worth of ETFs to stop another wave of sell-offs that began in mid-2023.

This stuff works for a while, as foreign speculators rush to it to make short-term profits. Despite all these efforts to prop up the market, the Shanghai Composite Index rose 17% (or 469 points) from the low on February 4 (2,702) to the high on May 19 (3,171).

But then foreign investors took their profits and withdrew their money, so foreign capital inflows will now be negative in 2024.

And the Shanghai Composite Index has now lost 278 points, nearly 60 percent of the 469 points it gained during the support rally, a repeat of previous support rallies. So it seems far better to obscure the sentiment index of foreign speculators.

Long-term investors are looking at one of the ugliest stock market charts ever (see chart above), which has been a relentless bottomless pit since 2007, with huge price increases followed by huge price drops. And even success stories like BYD: Since Buffett started dumping the stock in 2022, the stock has fallen 33%.

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