Trading at the Chinese bourses was suspended at 9.42 a.m. today after the Hushen 300 dropped by over 5 per cent. Trading had to be halted for the day when the index witnessed a further 2 per cent dip in just two minutes after reopening at 9.57 a.m.
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A Chinese investor takes a smartphone photo of electronic displays showing stock prices in a brokerage house in Beijing, Friday, Jan. 8, 2016.
In Europe, where most markets will soon close, Britain’s FTSE 100 fell by 1.8 percent, Germany’s DAX index was 2.5 percent lower and France’s CAC 40 dropped 2.1 percent.
Panic selling in Asia prompted by developments in China spread across the globe and threw the Toronto stock market into a tailspin Thursday, capping off seven consecutive days of losses and thrusting the index into bear market territory. Because of government regulations, very few foreigners even own stocks on the Chinese markets that seized up. It was this week’s second daylong suspension after a plunge in prices Monday tripped the same “circuit breakers” that were introduced January 1.
“The circuit breaker has cut off the market liquidity and investors are afraid they won’t be able to sell”.
China was hoping the introduction of circuit breakers would help prevent a repeat of last summer’s market crash. On Thursday, trading was halted after only half an hour.
The stop – activated when markets fall more than seven percent – was triggered on its first day Monday.
Prices plunged 30 percent after that, triggering a panicked response by Beijing. The ban was expected to expire on Friday, and many analysts said investors were selling in anticipation of a flood of sell orders when the ban ended. Regulators scrapped the so-called “circuit breakers” because many believe they were fueling sharp trading losses – rather than taming them.
The yuan’s central parity rate lost 332 basis points to 6.5646 against the US dollar on Thursday, the lowest level since March 18, 2011, data from the China Foreign Exchange Trading System (CFETS) showed. Chinese stocks nose dived on Thursday, triggering the second daylong trading halt of the week and sending share markets, currenci…
In mid-afternoon trading, the S&P/TSX composite index was down for a seventh consecutive day, off 258.65 points – or more than two per cent – at 12,468.15 as commodity prices, including oil, continued to fall amid perceived weakness in the Chinese economy. Hong Kong’s Hang Seng shed 1 percent.
Benchmarks in Taiwan, New Zealand and Southeast Asia also fell.
Wall Street shares closed at three-month lows overnight amid the general risk aversion, amplified by a continuing decline in crude oil prices and geopolitical concerns following North Korea’s nuclear test on Wednesday. Bega Cheese dropped 7 percent and Blackmores, the company it is joining to export baby formula to China, was down 2.5 percent. Brent crude, a benchmark for global oils, rose 11 cents to $34.34 a barrel in London. The dollar fell to 117.98 yen from 118.38 yen late Thursday.
Fund manager Perpetual was down 4 percent.
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The euro ticked up to 127.83 yen from 127.76 yen in USA trade, and to US$1.0825 from US$1.0782 although it is sharply down from levels seen at the end of previous year.
