Things are going quite well for US equities. Perhaps you noticed. The S&P hit a new record Friday.

In China, by contrast, things could scarcely be going worse. Notwithstanding a good session on Thursday, the CSI 300 trundled to a third consecutive weekly decline, the ninth in 10. The Shanghai Composite fell 1.7% on the week.

To say A-shares are off on the wrong foot in 2024 (after an egregious 2023) would be to understate the case. The benchmark is tracking for a sixth straight month of losses.

The “uninvestable” characterization is apt. Xi Jinping has succeeded in scaring local equities into an intractable, unending bear market.

Data out this week showed that although Beijing hit its growth target for 2023 (according to Chinese statisticians, anyway) the economy is fragile. Domestic demand is moribund, as evidenced by three straight months of CPI deflation, the longest such streak since 2009.

Foreign investors want nothing to do with Chinese shares. And haven’t for a while.

Note the rather remarkable shift in sentiment illustrated by the figure: Overseas investors bought (figuratively and literally) the re-opening boom narrative this time last year. By summer, it was abundantly clear that no such renaissance was in the offing, and by October, net selling was the most acute on record.

Citic Securities reportedly suspended short-selling this week in a bid to put a floor under stocks, and there was some evidence to suggest the vaunted “national team” was behind an otherwise hard-to-explain rally on January 18.

Note that more local equity mutual funds were liquidated in 2023 than in any other year looking back a decade.

As Bloomberg explained, “many funds prefer liquidations given the complexity of other options such as merging with another fund [and] such product closures would mean forced selling of the portfolio’s holdings.”

BofA’s Michael Hartnett, while editorializing around the run higher in Japanese shares, said the Nikkei is benefiting from “ABC”: “Anywhere but China.”