Chinese stock markets suspended for day after shares fall 7%
Mainland China’s benchmark Shanghai Composite Index ended down 7.3 per cent at 3,115.89, after trading for only 13 minutes on Thursday. Analysts said the market was likely being supported by buying from Chinese government entities that have been dubbed the “National Team”.
The Toronto Stock Exchange was down sharply Thursday morning amid fresh upheaval around the world following another early shutdown of two major Chinese stock markets. “However, the latest practices indicated the system has a “magnet effect” that draws investors to sell shares as the index approaches limit thresholds and thus accelerate declines”, it said.
Others said the suspension of the circuit breaker may slow down losses but wouldn’t reverse the decline in Chinese equities.
Earlier on, markets had already been suspended for 15 minutes following a 5 per cent fall in the blue-chip CSI300 index just a few minutes after the market open. The circuit breaker rule now in place in China stops trading for 15 minutes if the CSI300 Index moves 5 per cent. All markets then shut if the CSI300 moves a total of 7 per cent when trading resumes.
“Sentiment seems to be rather fragile at the moment as the soft macroeconomic environment together with the fear of not being able to sell during a market correction causing some anxiety among investors”, he wrote in a note to clients. The circuit breaker, which came into effect this year, aims at reducing volatility in the Chinese markets.
But trader worries were intensified when China also fixed the RMB at 6.414 to the dollar on Wednesday, putting it at its lowest level since August 2011. Japan’s Nikkei 225 lost 0.4 percent to 17,697.96 and Australia’s S&P/ASX 200 shed 0.4 percent to 4,990.80.
In other Asian markets, Hong Kong’s Hang Seng advanced 0.6 percent to 20,453.71 and South Korea’s Kospi added 0.7 percent to 1,917.62.
The The MSCI Emerging Markets Index, which also had to contend with a 6% fall in the price of oil and news about North Korea successfully testing its first hydrogen bomb, fell 1.1%, the lowest since July 2009.
The new mechanism would help prevent excessive reactions of investors and give them more time to confirm whether a stock’s price is reasonable, according to the plan.
NEW YORK (AP) – Stocks are opening higher on Wall Street as traders were encouraged by news of strong job gains in the U.S. last month. On Thursday, the contract lost 70 cents to $33.27. Brent crude, a benchmark for global oils, fell $1.14, or 3.3 percent, to $33.09 a barrel in London. The Australian dollar, often used as a liquid proxy for the yuan, fell half a USA cent in a blink. Some other Asian currencies retreated in concert with the yuan.
The price of copper fell 2 percent, however.
The price of gold and silver both rose more than 1 percent, with gold at $1,103.90 an ounce and silver at $14.16 an ounce.