It all started off well-enough: the USDJPY was modestly lower but noting big, then the Yuan was fixed a little less modestly lower – well ok, it was the lowest fixing in 8 weeks confirming China just couldn’t wait for the Shanghai summit to be over – and then suddenly the Chinese market realized what we said earlier in the weekend, namely that with the much anticipated G-20 meeting a complete dud, and with no major stimulus on the horizon, suddenly the trapdoor below Chinese stocks opened and the Shanghai Composite has started the new month tumbling over 4%.

With this latest plunge, Chinese stocks are now back to levels last seen in November 2014 when the Chinese “replacement” bubbles (out of shadow banking) was just getting started:

And just in case it wasn’t obvious:

• CHINA STOCKS’ TECHNICAL REBOUND IS OVER: HENGSHENG’S DAI MING

But perhaps even more important as the G-20 fiasco, Shenwan Hongyuan Group analyst Qian Qimin told Bloomberg that “the red hot property mkt may attract more and more fund inflows and investors worry this might divert liquidity from the stk market” which incidentally is precisely what we said earlier this afternoon when observing the latest iteration of the Chinese housing bubble:

To us, there is nothing surprising in this behavior: now that the Chinese stock market bubble has burst, the local population has to find a new asset class which to chase for the next few months, and for the time being that asset is housing.

It also means that Chinese stocks are done for the time being. It remains to be seen how the rest of the world will digest this unpleasant fact.