A pedestrian walks past an electronic board showing the stock market indices for various countries, on January 7. First trigger is set at 5%, which would lead to trading halt of 15 minutes and a drop of 7% would halt trading for the day.
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Trading on the Chinese stock markets was halted for the second time this week, after just 870 seconds of trading.
Chinese stock trading was also suspended on Monday after the market plunged. The overnight fall in crude oil prices to eleven-year lows also increased risk aversion. The smaller Shenzhen Composite Index slumped 8.3 percent to 1,955.88.
“It’s been hard to catch a breath in 2016 and traders haven’t really known which way to turn”, Chris Weston, chief market strategist in Melbourne at IG Ltd., told clients.
A lower currency should make Chinese exports cheaper on world markets – a challenge for overseas competitors – but at the cost of its imports becoming more expensive in yuan terms. At the time, Beijing said it was hoping to allow market forces more control over the yuan – but the central bank has spent billions in recent months to prop up the currency.
The manager of a Chinese hedge fund that returned a surprising 86 percent during last year’s stock rout, will sell all its stock holdings as renewed fears tanked China’s markets again.
Shares in Dubai fell almost three per cent in the opening minutes of trading, while Abu Dhabi’s headline index retreated around 1.3 per cent.
Some analysts argue that Beijing would be best served by resisting the temptation to intervene in markets.
Major indexes in the United States closed more than 1 per cent down, with the Dow Jones Industrial Average shedding 252.15 points, or 1.47 per cent, at 16,906.51. If it moves 7 percent, trading will be suspended for the rest of the day. The People’s Bank of China cut its reference rate on Thursday for an eighth straight day, fueling concern that tepid economic growth is prompting authorities to guide the currency lower.
The CSI300 index fell 7.2 percent, to 3,284.74 points, while the Shanghai Composite Index lost 7.3 percent, to 3,115.89 points.
The Shanghai Composite index ended down 7.32 percent, while the Shenzhen Composite plunged by 8.35 percent, according to Ifeng News. And Hong Kong’s main stock indexes touched their lowest level since mid-2013, as panic from China’s free-fall spread.
Other emerging market currencies were dragged down.
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Australia extended losses Thursday, with the ASX 200 closing down 2.20 per cent, with the energy sector taking a 5.29 per cent hit by market close.
