Stock market turmoil: China shares fall another 5%

Major Chinese stocks today bottomed out after the securities regulator chose 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. Global equities also slid this week by the most in more than four years, even as Chinese authorities moved to stabilize the yuan and quell turmoil in financial markets.

The U.S. dollar fell against the Taiwan dollar Friday, shedding NT$0.029 to close at the day’s high of NT$33.501 after an increase in the Chinese yuan’s reference rate sparked buying in regional currencies, dealers said.

The CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 5% to 3,192.45, while the Shanghai Composite index lost 5.3% to 3,016.7 points.

If the index ends on a high note today, it will confirm a bullish pattern that started on Friday. Frankfurt’s DAX 30 slipped 0.4 percent and Paris’s CAC 40 was flat at 4,333.2. IHS Global Insight’s China economist Brian Jackson postulated that investors “have been importing the panic from China into other markets”, and while the stock market might remain tepid in the coming quarters, it might not have much of an impact on gross domestic product in the long run. Chinese stocks were volatile Friday and other Asian markets rebounded.

The loonie remained near 12 1/2-year lows at 70.94 cents USA, down 0.08 of a cent.

SHANGHAI – Chinese stocks closed Monday’s session at their lowest since September, following weak inflation data at the weekend, and amid continuing investor anxiety over the economy and the trajectory of the yuan.

On Monday, the Caixin China General Manufacturing purchasing managers index dipped to 48.2 in a 10th straight monthly decline.

Chinese markets are crowded with individual investors who treat them more like gambling operations than opportunities for long-term investment.

The People’s Bank of China has allowed the yuan to decline gradually since August after loosening its tie to the dollar. That’s part of the reason market spikes and drops in China can be quite sharp.

A series of cuts in the yuan currency s value to a five-year low against the dollar added to the sense of nervousness as Beijing stood accused of bungling its handling of the crisis. Both the Dow and S&P 500 SPX had their worst five-day starts in history last week. From Saturday, shareholders holding more than 5% of a company’s shares will not be able to sell more than 1% of the company’s shares within any three-month period, and will have to publicise their plans 15 trading days beforehand.

The euro was down 0.1 per cent against the U.S. dollar at $US1.0923, while the greenback lost 0.1 per cent to Y117.52. “We’re still walking on egg shells, but this is definitely going to help turn a corner”.