China drops stock market ‘circuit breakers’ after four days

A woman reacts near a display board showing the plunge in the Shanghai Composite Index at a brokerage in Beijing on Thursday. The latest selloff appeared to be sparked by the Chinese Central Bank’s decision to cut the yuan reference for the eighth day in a row and by the most since last August’s stock market rout, leading to a steep depreciation in the currency.

The weighted index on the Taiwan Stock Exchange closed up 41.91 points, or 0.53 percent, at 7,893.97, after moving between 7,788.71 and 7,906.55, on turnover of NT$91.34 billion (US$2.74 billion).

China will suspend “circuit breakers”, the top securities regulator said, after the trading curbs were again triggered Thursday when share prices dropped more than seven percent, halting share trading early for the second time this week. US stocks are opening sharply lower as worries intensify about China’s economy and dropping oil prices.

NPR’s Marilyn Geewax discusses this and what it could mean for Americans, with Here & Now’s Jeremy Hobson.

The Standard & Poor’s 500 index lost 24 points, or 1.2 percent, to 1,966.

The circuit breaker, created to put a floor under volatile shifts in sentiment and protect investors, was blamed by some market watchers for inadvertently aggravating anxiety and accelerating the selloff.

Angus Nicholson, market analyst at IG in Melbourne, Australia said the sell-off this week only underlines that the Chinese government’s intervention previous year to support the market had delayed the inevitable slump.

Largan, one of the most important suppliers to Apple Inc., gained 7.92 percent to close at NT$1,975.00 after a 6.63 percent dive seen a session earlier.

Analysts said the move injected life into the market.

Following the trading suspension Thursday, the CSRC unveiled new rules to limit big shareholders from selling their stocks. “Unfortunately, this sends signals that at least in area of the stock market, policymakers are making big mistakes and are going back and forth and have kind of lost the game on policy”, said Kuijs.

“There was some apparent panic selling with investors trying to reduce exposure before the mandatory triggers entered into effect”, said Gerry Alfonso, trading head at Shenwan Hongyuan Securities in Beijing.

In Japan, the benchmark Nikkei 225 index fell 1.2% to 17,562.23 as concerns remained about a deeper than expected slowdown in the Chinese economy. The next day it fell another 1.6 percent. The contract on Thursday dropped $2, or 5.6 percent, to settle at $33.97 a barrel. Energy stocks rose along with the price of oil. The euro rose to $1.0795 from $1.0778. But in a week with a claimed nuclear test by North Korea, rising tension between Iran and Saudi Arabia, and disappointing economic news from the USA and China, Nigel Green – founder and chief executive of London-based global financial consultant deVere Group – says that China’s currency was the leading culprit.