Chinese markets put on hold as shares plunge

Chinese stock markets have tumbled seven percent in their opening session of 2016, forcing exchanges to suspend trading for the first time.

The plunging share prices yesterday came as weak factory activity surveys and falls in the yuan added to concerns about the struggling economy.

Early losses quickly snowballed in the afternoon, with trading suspended around 05:30 GMT, about 90 minutes before the regular close.

Selling intensified after a brief 15-minute trading halt early in the afternoon when main indexes had shed five percent, and activity in Shanghai and Shenzhen was halted for the day soon after.

It was the first day that the China markets so-called “circuit breakers”, intended to curb volatility, had been in effect.

Al Jazeera’s Adrian Brown, reporting from Beijing, said the plunging share prices were “another reminder that China’s economy is continuing to splutter”.

“It’s an economy weighted down by two problems at the moment: excessive government debt and currency flight,” he said.

“The Chinese who can get their money out of the country continue to do so. They no longer have any faith in the stock market or the property market and they’re voting with their feet.”

The blue-chip CSI300 index .CSI300 ended down seven percent at 3,470.41 points, while the Shanghai Composite Index lost 6.9 percent to 3,296.66.

Hong Kong’s Hang Seng Index was pulled down three percent in response.

Investors also dumped stocks ahead of the imminent expiration of a share sales ban on listed companies’ major shareholders, which had been imposed during the market crash last summer.

“The slump apparently triggered intensified selling, while the triggering of the circuit breaker seems to have heightened panic, as liquidity was suddenly gone and this is something no one has experienced before,” said Gu Yongtao, strategist at Cinda Securities.

“It was a stampede.” – Xinhua

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