Chinese equities – playing the intervention game

China's benchmark stock index, Shanghai Composite after yesterday's -6.15% drop, opened down -3% today and recovered sharply to close 1.23% higher, suggesting official intervention at play here

In search of official buyers -

• Do you want to play the Chinese gambling machine? -  just have to know where the official buyers are and when they are a bit relaxed.

Hedge funds are playing this tune in China's stock market, which according to many this has been the only game in town as of now.

There are no signs yet that the buyers are genuinely returning in the market, which leaves the government only major buyer in town.

How to play the game?

Chinese authorities are fighting the war at many fronts simultaneously. They are managing Yuan, trying hard to include it in IMF's currency basket, manage a falling stock market, fight an ailing economy, trying to reverse massive hot money outflow.

Sellers are coming back whenever after few days of gains market is showing signs of exhaustion and relaxed official buying, whereas heavy selling is usually followed by heavy buying and intervention.

A simple but close look to the chart without gadgetry reveals, the latest exhaustion near 4000 mark, followed by heavy selling and then of course intervention/buying.

All that needed for the stocks are improvement in fundamentals not fake announcements, changes to improve stock price.