China stocks plunge, trigging another market halt

Trading in Chinese stocks was suspended Thursday for a second day this week after a dramatic plunge that sent shocks through global markets.

(AP Photo/Mark Schiefelbein). Chinese investors use a computer terminal to check stock prices in a brokerage house in Beijing, Friday, Jan. 8, 2016.

Tokya: Asian stocks slid across the board on Thursday after China again guided the yuan sharply lower while Shanghai shares tanked more than 7 per cent and triggered a stock market circuit breaker for the second time this week.

(AP Photo/Mark Schiefelbein). Chinese investors monitor stock prices in a brokerage house in Beijing, Friday, Jan. 8, 2016.

The benchmark CSI 300 Index dropped rapidly by 5 percent at 9:42am, triggering a 15-minute trading suspension.

Investors at a brokerage house in Beijing wait for China’s stock market to open. If it falls by 5%, trading is initially suspended for 15 minutes.

Global stocks plunged on Wednesday and Thursday, as traders’ anxious about the debacle on the China stock exchanges and the reduction in the value of the RMB. The local currency fell to 66.29 U.S. cents from 66.53 cents.

“Investors recognize that the [central bank’s] actions serve as confirmation that China’s economy is slowing in a meaningful fashion, which has real repercussions on global… growth”, Mike O’Rourke, chief market strategist at JonesTrading, wrote in a note.

Analysts said the move injected life into the market.

The emergency measures, which took effect January 1, also kicked in on Monday to halt stock trading. The halts, which went into effect at the beginning of the year, were triggered twice this week.

The CSRC said Wednesday it would keep in place rules, which had been set to expire this week, that prevent shareholders who own more than 5 percent of a company from selling off shares.

It was the biggest fall between daily fixings since August and the eighth day in row for the PBOC to set a lower guidance rate.

The Dow Jones industrial average sank 2 percent. At one point it was down 442 points.

The S&P 500 index gave up 47.17 points, or 2.4 percent.

The Shanghai Composite Index was up 2.4 percent at 3,199.56 by late morning after swinging between gains and losses.

European markets also dropped. The Nasdaq composite index fell 3 percent.

US crude plunged to its lowest level since February 2004.

Energy firms were among the worst hit after Brent oil prices fell six per cent to its lowest finish since July 2004. The stock declined $1.09, or 9.2 percent, to $10.70. Australian shares dipped 0.1 per cent.

2016 has started with a series of warning signs about China’s economy.

Thursday’s selling came after the Chinese government allowed its currency to weaken against the dollar in a reflection of sluggishness in the country’s giant economy.