The great white shark has to keep moving or it dies. Its breathing system relies on a constant churn of new water in order to keep the oxygen flowing.
The typical Chinese stock rally works in a similar way. If starved of fresh liquidity, it tends to choke. Should it lose momentum altogether, multiple organ failure could follow with alarming speed.
On Monday, Chinese equities gave a discernible wheeze, probably triggered by the regulator’s latest attempt to cool margin lending by tightening the rules for a common way Chinese investors borrow to buy shares. The Shanghai market shed 1.6 per cent, while the Hang Seng China Enterprises index — Hong Kong listings of mainland companies — dropped 2.9 per cent.
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