Eoin Treacy's view Increased supply of shares both from the unlocking of government holdings and the pressure put on financials to increase their reserves has been an obstacle for the Shanghai A-Shares market for much of the last year. November will be a key month for the Chinese equity market with the expiration of the lock-up for Rmb1,773 billion coinciding with that of IPOs totalling Rmb119 billion.

After November the supply of new shares reduces considerably which should help to reduce indigestion on the demand side. In the meantime, the Shanghai A-Share Index has laboured under this weight of new shares for the last year but rallied well in July and has been consolidating mostly below 2800 since early August. A sustained move back above the 200-day MA, currently in the region of 3000, would indicate demand has regained the upper hand.

Perhaps an indication of the extent to which supply plays a part in the underperformance of Shanghai A-Shares is the outperformance of Shanghai B-Shares, Shenzhen A-Shares and Shenzhen B-Shares all of which have rallied impressively this year.