China stocks plunge, triggering another market halt

January 7, 2016 10:00 pm

 

A
woman reacts near a display board showing the plunge in the Shanghai
Composite Index at a brokerage in Beijing, , Thursday, Jan. 7.
Photo / Supplied

China halted stock trading Thursday, its second day-long trading
suspension this week, after prices plunged in the latest spasm of
investor panic on its volatile markets.
Chinese markets have
lurched up and down as regulators gradually withdraw emergency measures
imposed after the main stock index plunged in June following an
explosive rise.
A similar price plunge Monday triggered a sell-off on Wall Street and other global markets.
On
Thursday, trading was suspended after a market index, the CSI 300,
nose-dived 7 percent a half-hour after markets opened, triggering a
“circuit breaker” that was introduced Jan. 1.
Financial analysts
have warned Chinese markets are likely to see extreme volatility for a
few more months as they seek a stable level following last year’s rout.

The “circuit breaker” requires a 15-minute pause in trading if
the CSI 300 falls 5 percent within 30 minutes. Trading halted only 13
minutes into the morning session Thursday. Stocks plunged further after
trading resumed 15 minutes later, triggering the daylong trading freeze.
The
benchmark Shanghai Composite Index fell 7.3 percent to 3,115.89. The
Shenzhen Composite Index for China’s smaller second exchange slumped 8.3
percent to 1,955.88.
Also Thursday, a six-month ban on sales by
shareholders who own more than 5 percent of a company was due to expire.
Regulators announced this week that to avoid fueling further
volatility, such sales will be limited to private transactions.
The Shanghai benchmark more than doubled between late 2014 and its June 12 peak as millions of novice investors bought shares.
Prices
plunged 30 percent after that, triggering a panicked response by
Beijing. Regulators banned large sales, cut interest rates, canceled
initial public stock offerings and ordered state companies to buy
shares.
Chinese leaders had encouraged the public to buy in hopes
of raising money to overhaul state industry. The market rout alienated
small investors who were left holding shares worth less than they paid.
Authorities
say shares bought by state companies will be transferred to China’s
sovereign wealth fund to avoid depressing prices by selling them in the
open market. The ban on new IPOs was lifted in November.

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