China’s Stock Rally Still Misses One Crucial Piece

Chinese stocks have rebounded yet local retail traders are still holding back. That's bad news for a rally that's looking increasingly stretched.

In Hong Kong, aggressive buying by foreign funds has lifted the Hang Seng Index by 18% since the close on April 19. Things, however, look much calmer onshore. The CSI 300 Index has climbed only 4% in that span, still short of a technical bull market.

One explanation for the stark underperformance of A shares is a lack ...