BY TYLER DURDEN
THURSDAY, SEP 04, 2025 – 10:45 AM
China’s equity rally lost steam in the past few sessions, with the Shanghai Composite sliding -1.3% and losing the 3800 level just 9 days after breaking above it and breaking out above the historic trendline we pointed out two weeks ago. The index is now down 3 days in a row, the longest such streak since May.
The sell off today was triggered by a Bloomberg report of China’s financial regulators mulling cooling measures for the market after a US$1.2t rally stoked worries of a speculative frenzy a la 2025 style. Policymakers are reportedly considering moves such as the removal of short-selling restrictions and the introduction of other measures to curb speculative trading.
To be sure, none of this is not new: as Goldman HK trader Fred Yin writes this morning, since late last week there were already signs that regulators are trying to cool the temperature on the rally. This however, did not come from the government – as a reminder, in China’s centrally planned markets everything is officially sourced – but from "people familiar" so this is almost certainly a plant by someone who missed the China rally and hoped to spark a selloff to get in cheaper. It also expains why the National Team stepped in at the close today to lift stocks – why would they do that if they wanted to hammer the bubble risk?
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