Arab Today, arab today chinese stock markets closed after shares fall 7
Last Updated : GMT 16:50:38
Arab Today, arab today
Arab Today, arab today

Chinese stock markets closed after shares fall 7%

Arab Today, arab today

Arab Today, arab today Chinese stock markets closed after shares fall 7%

China stock market
Beijing - AFP

Chinese authorities for the first time closed the Shanghai and Shenzhen stock exchanges early under a "circuit breaker" mechanism to curb volatility after shares fell seven percent on Monday, raising concern over their commitment to market openness.

China's stock indices plummeted in mid-2015 as a debt-fuelled bubble burst, sending ripples through global exchanges and wiping trillions from market capitalisations.

The falls prompted wide-ranging intervention by Beijing to prop up share prices.

The measures are estimated to have cost hundreds of billions of dollars, but worked -- Shanghai ended the year up 9.4 percent, while Shenzhen soared more than 63 percent.

Even (Taiwan OTC: 6436.TWO - news) so the country's markets remain volatile -- Shanghai saw a five percent daily fall as recently as November. As part of efforts to prevent a repetition of the rout, authorities instituted the "circuit breaker" system from Monday.

Under it, a five percent drop in the CSI300 index, which covers both bourses, triggers an automatic 15-minute trading halt. A fall of seven percent means the two exchanges are closed for the rest of the day.

But analysts said the "circuit breaker" risked interfering with market efficiency and could even prove counter-productive, heightening volatility instead of reducing it.

?The mechanism is merely a tool and it won?t help the market finding its true value," Northeast Securities analyst Shen Zhengyang told AFP. "With (Other OTC: WWTH - news) or without the system, the market will continue to drop further if selling pressures piles up."

"What worries me the most is the enforcement of the system will also hurt market liquidity," he added. "Investors who want to sell can't, and those who want to buy also can?t. Trading will dry up if it gets triggered too many times."

- Manufacturing concern -

Global markets stuttered Monday as a flare-up in tensions between Iran and Saudi Arabia raised concerns about the volatile Middle East. But the Chinese falls followed poor data from official and private surveys of manufacturing activity in the world's second-largest economy.

In addition, a ban preventing shareholders with holdings of more than five percent in a company from selling shares -- introduced in July to help defend prices -- will expire on Friday, triggering fears of a sell-off.

"The market is worried about the upcoming lifting of the rule that bans shareholders from selling," Central China Securities analyst Zhang Gang told AFP.

Official and private Purchasing Manager Index (PMI) surveys both showed contraction, heightening concerns over the health of the key sector.

China on Monday also cut the yuan?s value against the greenback, making it weaker than 6.5 for the first time in more than four-and-a-half years, as pressure on the currency mounts from the country's growth slowdown.

"The weaker PMI and the weaker yuan are the likely triggers," Michael Every, head of financial markets research at Rabobank Group in Hong Kong, told Bloomberg News.

By Monday's early close the benchmark Shanghai Composite Index had tumbled 6.86 percent, or 242.92 points, to 3,296.26.

The Shenzhen Composite Index, which tracks stocks on China's second exchange, slumped 8.22 percent, or 189.75 points, to 2,119.16.

Hong Kong closed on its normal schedule but the Hang Seng Index (Other OTC: HGSXF - news) was down 2.68 percent, or 587.28 points, at 21,327.12.

"Circuit breakers" are not unique to China. The New York Stock Exchange put them into place in the late 1980s, following market crashes. They were first triggered in 1997, the year of the Asian financial crisis, and have rarely gone into effect since.

The device was envisioned as a fail-safe that would give panicking investors an opportunity to rethink their investment decisions, but the threshold for an early market close is signficantly higher: a 20 percent fall.

Zheshang Securities analyst Zhang Yanbing said that although the Chinese circuit breaker temporarily interrupted the fall on Monday, the market was "on a downward trajectory".

"The mechanism is only designed to curb daily volatility, and it?s still a new system", he said. "It (Other OTC: ITGL - news) ?s hard to tell whether the use of the system will reduce or increase the market swings in the future."

 

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today chinese stock markets closed after shares fall 7 Arab Today, arab today chinese stock markets closed after shares fall 7

 



Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today chinese stock markets closed after shares fall 7 Arab Today, arab today chinese stock markets closed after shares fall 7

 



Arab Today, arab today
Arab Today, arab today Designer Aql Faqih aspires to innovation

GMT 18:41 2017 Friday ,20 October

Designer Aql Faqih aspires to innovation
Arab Today, arab today Italy regions back 'big bang' autonomy

GMT 07:10 2017 Monday ,23 October

Italy regions back 'big bang' autonomy
Arab Today, arab today Etiquette expert underlines importance of gifts

GMT 17:52 2017 Sunday ,03 September

Etiquette expert underlines importance of gifts
Arab Today, arab today Israel police detain 15 over campaign

GMT 14:19 2017 Monday ,23 October

Israel police detain 15 over campaign
Arab Today, arab today Maltese demand justice for murdered

GMT 06:08 2017 Monday ,23 October

Maltese demand justice for murdered
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today World's deepest lake in peril

GMT 15:54 2017 Friday ,20 October

World's deepest lake in peril
Arab Today, arab today Ex-French minister Dati wants tough action

GMT 10:54 2017 Thursday ,19 October

Ex-French minister Dati wants tough action
Arab Today, arab today Delhi braces for pollution 'airpocalypse'

GMT 16:07 2017 Friday ,20 October

Delhi braces for pollution 'airpocalypse'
Arab Today, arab today The history of solar eclipses

GMT 05:16 2017 Sunday ,20 August

The history of solar eclipses
Arab Today, arab today Tesla to build wholly-owned plant

GMT 07:55 2017 Monday ,23 October

Tesla to build wholly-owned plant
Arab Today, arab today EU raids automaker BMW

GMT 11:06 2017 Saturday ,21 October

EU raids automaker BMW
Arab Today, arab today Rogina happy for reactions to “The Flood”

GMT 09:30 2017 Friday ,20 October

Rogina happy for reactions to “The Flood”
Arab Today, arab today Massacre fears spark race

GMT 19:09 2017 Thursday ,19 October

Massacre fears spark race

GMT 08:15 2017 Thursday ,19 October

Actress Mona Zaki praises husband’s role

GMT 18:15 2017 Monday ,16 October

British actress becomes fifth woman

GMT 16:53 2017 Tuesday ,05 September

Youssra depended on colored foam

GMT 16:00 2017 Wednesday ,18 October

Climate-disrupting volcanoes helped topple

GMT 10:46 2017 Saturday ,05 August

Nanis reveals simple ideas for home renovation

GMT 06:07 2017 Sunday ,22 October

15,000 Under Fives Die

GMT 12:54 2017 Saturday ,21 October

Malaysia Airlines picks new CEO

GMT 17:12 2017 Monday ,07 August

Al-Shawaifi reveals secrets of total solar eclipse

GMT 20:46 2017 Thursday ,19 October

Qualcomm files lawsuits in China to ban iPhones

GMT 16:53 2017 Saturday ,02 September

Mai importance of gifts during Eid Al-Adha
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday