Shortly after 1042am local, Chinese stock futures (CSI-300) flash-crashed over 12.5% on extreme heavy volume (while the cash CSI-300 remained unch). This move erased 3 months of gains but within 1 minute was back in the green with stocks up over 2.5%. The shocking collapse, exaggerated by a major lack of liquidity, was made more surprising by the fact that the last week has seen a record short position in the major Chinese stock ETF. Simply put, the heavy hand of market-central-planning has erased any and all depth in futures markets and positioning has become so tilted that price vacuums are likely to continue to occur.
“It looks like a fat finger,” Fang Shisheng, Shanghai-based vice general manager at Orient Securities Futures Co., said by phone. “Liquidity in the market is really thin at the moment. So the market will very likely see big swings if a big order comes in. The order looks like it’s from a hedger.”
This is a record level of relative short interest...
Fuente: Zerohedge.com
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