Yesterday, we quoted a South China Morning Post article as saying that the China Securities Regulatory Commission (CSRC) vice-chairman Tu Guang-Shao indicated that an H-A share arbitrage mechanism was being considered. Our original take is here. Now, the same newspaper quotes a CSRC spokesman as follows:

"Mr. Tu was responding to the question on a share-swap deal between the Hong Kong and mainland exchanges. What was reported in their article was totally a result of misunderstanding."

A researcher at the Shanghai Stock Exchanges is also quoted as saying:

"We never heard of that plan and none of us are looking into this policy for now."

No wonder Red Cat Journal's head was spinning after reading of this announcement. Life makes a little bit more sense again. Just goes to show that in many cases the mainstream media can't be trusted. Perhaps the reporter was hearing Cantonese while Mr. Tu was speaking Mandarin. And China's stock regulators now look a bit more composed rather than confused. In this case, our judgement that China's leaders could be more market savvy than is generally recognized still holds. See "Follow-up: China's leaders more market savvy than investors realize" for more on this view.