In August, the Shanghai Stock Market’s Shanghai Composite Index suffered losses of over 8 percent and then 7 percent on consecutive days.
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Major Chinese stocks today bottomed out after the securities regulator made a decision to terminate the controversial “circuit-breaker” mechanism that has halted trading twice this week, including after an abrupt sell-off yesterday that led to heavy losses and spooked global markets.
(AP Photo/Mark Schiefelbein). Chinese investors use a computer terminal to check stock prices in a brokerage house in Beijing, Friday, Jan. 8, 2016. In addition to worldwide stock market declines, oil prices Thursday hit their lowest since the 2008 financial crash, while commodity prices overall touched a 13-year low.
The price of oil sank to its lowest level in 12 years as traders anxious that a slump in China, the world’s second-largest economy, would mean lower global demand for energy.
The Dow Jones industrial average skidded 366 points, or 2.2 percent, to 16,540 as of 3:16 p.m. Eastern. In November, 211,000 jobs were added, the unemployment rate dropped to 5%, and wages increased 2.5%.
China’s tumbling stock prices are, in themselves, nothing for investors outside the country to panic over. This second shut-down from China was necessary because of the new rules implemented to avoid panic selling of shares.
On Friday, China managed to pull back from the brink and the benchmark Shanghai Composite closed 2%. Unlike in the United States, individual investment in China’s two stock markets-the other is the Shenzhen Stock Exchange-is neither widespread nor as long-term a proposition with individual investors.
US and European companies have rushed to sell cars and a multitude of other products to China’s fast-growing middle class. China accounted for more than half of Apple’s revenue growth in the fiscal year that ended in September.
“The market expectation now is for the yuan to depreciate due to the economic slowdown (in China)”, she said.
The halt came after Shanghai dived 6.86 percent on Monday before trading was suspended, after the release of weak manufacturing data heightened investor worries. The benchmark USA rebounded moderately in Asian daytime hours, rising 67 cents to $33.94 in electronic trading on the New York Mercantile Exchange. “A level of the currency that would make sense for the US doesn’t make sense for China”, said Louis Kuijs, head of Asian economics of Oxford Economics.
The group expects more than $500 billion worth of cash previously invested in things like Chinese factories, Brazilian government bonds, and Nigerian stocks to cascade out of such markets this year. Citigroup gave up $2.56, or 5.1 percent, to $47.56.
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China says its economy is growing at close to 7 per cent, but many investors don’t trust the government’s numbers and believe that figure is inflated. Gap rose $1.17, or 4.6 percent, to $26.46. The euro was down 0.4 percent at $1.0873 while the dollar rose 0.5 percent to 118.32 yen.
