Another grim day for Chinese A-shares; more scratching of heads. How can an economy growing at such a scorching pace have such a lacklustre equity market? Yesterday's 2 per cent fall in Shanghai trading brings the year's slump to 11 per cent. That is far and away the worst performance among leading indices, putting it in the same club as Spain and Portugal.

The truth is the Chinese market has never shown much of a relationship to anything. Last summer it seemed to be dragging global indices upwards, as the correlation between the Shanghai Composite Index and the S&P 500 nudged 0.87, suggesting an emerging synthesis with US markets similar to the Nikkei (with a five-year average correlation of 0.71), the Dax or the FTSE (both 0.88). But that was an illusion, caused by the simultaneous global loosening of monetary and fiscal conditions. The five-year average SCI/S&P correlation is a statistically insignificant 0.37; it is currently below zero.

The market's key determinants are momentum and liquidity. There is no better illustration of the first than the experience of the first waves of companies listing on Shenzhen's new growth market, ChiNext, last autumn. The first batch raised 1.2 times the amount sought, the second group 2.1, and the third group 2.5 times. And on the second, Shanghai's fall this year about corresponds to the year-on-year growth rate in M1 (cash in circulation plus demand deposits), down 9 percentage points since January. Put simply, the more money is not tied up in banks, the more likely it will end up in equities. Last July, new account openings to trade A-shares peaked at over 700,000 a week; so far in April the average is 318,000. Foreign investors, in short, should not bother trying to reconcile the SCI with regional or global peers. It remains a law unto itself.