China's Shanghai Index Slumps 2%: Spot the Odd Man Out

Why has Chinese stocks been dumped 2% today?

The answer can be seen from spotting the odd man out below

The Shanghai composite as shown in the chart above from google. Intraday charts have been segregated by red horizontal line. Boxes provide likely views of state intervention.

In the past four sessions, particularly during the afternoons, the China's National Team have been actively providing support to local stocks--through panic buying.

The National Team tried again (during the early post lunch break session), but apparently sellers prevailed this time. Could it be that the National Team just run out of resources for the ritual afternoon push? Or has the selling pressure been so strong to have overwhelmed the National Team efforts? Or perhaps both?

Mainstream media noticed it too...

From the Bloomberg:

China’s stocks slumped, led by financial companies and energy producers, as traders weighed the level of government support for the world’s second-largest equity market.

The Shanghai Composite Index slid 2 percent at the close, adding to Wednesday’s 1.3 percent drop. The gauge extended losses in late trading, a reversal of the pattern seen this week, when suspected buying by state-backed funds lifted shares toward the end of the day. Industrial & Commercial Bank of China Ltd. and PetroChina Co., which led the daily rebounds, fell at least 1.4 percent. A measure of property developers tumbled the most in two weeks on concern the government will take steps to cool home price gains in top cities.

The suspected failure of state funds to prop up stocks on Thursday removes one of the key supports for the world’s worst-performing equity market this year amid deteriorating economic data and disappointment over stimulus measures announced during annual policy meetings this week. Data on Thursday showed February consumer prices rose the most since mid-2014. Shanghai authorities held a meeting on Tuesday to discuss measures to tame soaring property prices after recent frenzied residential homebuying, according to people familiar with the matter.

"Late-session rallies in the previous few days fueled speculation that the national team stepped in," said Daniel So, a strategist with CMB International Securities Ltd. "Investors feel disappointed today when the pattern failed to repeat. A lack of stimulus measures from the National People’s Congress meetings also let people down."

At least the Chinese government has the mettle to declare support to stock market as part of their policies (what I call the Xi Jinping Put). And by doing so, they provide basic examples of why such interventions has repeatedly failed to weave its magic on the marketplace over the long run.  And yet all those previous interventions has embedded costs....accrued costs of which has yet to be manifested on the markets.