Asian stocks fall as China halted after market plunge

Trading on Chinese stock markets has been halted for the day Thursday.

The benchmark Shanghai Composite Index tumbled 7.3 percent to 3,115.89 before trading was halted.

A similar plunge on Monday triggered the circuit breaker, the first day the mechanism came into effect. Last year’s bungled stock market intervention and mini-devaluation punctured the myth of Chinese bureaucratic infallibility.

Earlier, the smaller Shenzhen index opened 1.88 percent lower at 11,504.9 points, Xinhua news agency reported.

The trading was halted after Shanghai Composite Index declined by 7.3 percent.

The system is based on the CSI 300 index, which tracks the largest 300 stocks on the two exchanges. As in August past year, the trigger is a sudden slide in the value of the yuan, which in turn has dragged down domestic stocks. Thursday’s market plunge may have been exacerbated by investors rushing to sell before they were locked out, some analysts said.

“The market-selling pressure was originally not this heavy”.

Hong Kong’s Hang Seng shed 2.6 percent to 20,439.20 and Australia’s S&P/ASX 200 retreated 2 percent to 5,023.40.

Energy firms were among the worst hit after Brent oil prices fell six percent to its lowest finish since July 2004.

The stop ― activated when markets fall more than seven per cent ― was also triggered on its first day Monday.

Most investing professionals recently surveyed by CNNMoney listed China as the biggest risk to US stocks.

In southeast Asia, Thailand’s PTT Global Chemical fell by 4.57% while Malaysian producer PETRONAS Chemicals Group slipped by 0.80%. Brent crude, a benchmark for worldwide oils, fell $1.14, or 3.3 percent, to $33.09 a barrel in London.

The People’s Bank of China cut interest rates and regulators suspended new share listings and threatened to jail short sellers, or traders who bet that stocks will fall.