The Shanghai Composite Index was up 2.4 percent at 3,199.56 by late morning after swinging between gains and losses. The “circuit breaker” functions by automatically suspending trading for 15 minutes if shares fell by five percent in one day, and closing them for an entire day if they dropped seven percent or more.
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Last year’s unanticipated currency devaluation, a collapse in the stock market and a heavy-handed rescue program badly dented global confidence in the ability of China’s Communist Party leaders to manage a complex economy and powerful financial markets at a particularly challenging time, when growth is already slowing. (AP Photo/Eugene Hoshiko)WASHINGTON: A scary sell-off in Chinese stocks is magnifying concerns about the health of the world’s second-biggest economy.
The Dow Jones industrial average skidded 308 points, or 1.8 percent, to 16,598 as of 1:23 p.m. Eastern.
In the end, the Hushen 300 Index plunged 7.21 per cent to close at 3,284.74 points.
Other global markets also fell.
A Chinese investor takes a smartphone photo of electronic displays showing stock prices in a brokerage house in Beijing, Friday, Jan. 8, 2016. Chinese stocks nosedived on Thursday, triggering the second daylong trading halt of the week and sending other Asian markets sharply lower as investor jitters rippled across the region.
“The poor start to the year clearly warns that global growth concerns remain, that commodity prices are still under downwards pressure and that volatility in investment markets will likely remain high”, said strategist Shane Oliver of AMP Capital.
During the first week of 2016, China stocks lost roughly 10 per cent, their worst weekly performance since the market crashed in the summer. Facebook rose $2.08, or 2.1 percent, to $100 and Apple, which is trading at its lowest prices in more than a year, picked up $1.81, or 1.9 percent, to $98.26.
C hina’s major stock markets recovered up to 2% in value on Friday after regulatory authorities scrapped a circuit-breaker mechanism and restricted the volume of shares major stockholders could sell at a time. Supported by a multibillion-dollar government intervention, the market rose nearly 25 percent in the final months of 2015, only to collapse in the new year.
Since the PBOC devalued the yuan by about 2 percent last August, the onshore-offshore spread had been growing, encouraging an outflow of capital that Beijing has been struggling to stem through measures including halting some forex business by a number of foreign banks, and ordering banks in some trading hubs to limit clients’ dollar purchases, sources have told Reuters. On Thursday, the central bank set the yuan at its lowest level since March 2011.
“The PBoC (People’s Bank of China) hopes to keep the renminbi broadly stable… but has botched communication of its policy”, Williams said in a research note. Monday’s stock price plunged was triggered by surveys that showed manufacturing in December was weaker than expected.
Chinese stocks gained in volatile trading after the government suspended a controversial circuit breaker system, the central bank set a higher yuan fix and state- controlled funds were said to buy equities. Brent crude, the benchmark for worldwide oils, lost 48 cents to $33.75 a barrel in London. On Thursday, the contract lost 70 cents to $33.27.
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The greenback was still poised to lose 1.6 percent against the yen this week but is broadly flat against both the euro and a basket of currencies.
