In what was quite a shock for the opening day of Asia trading for the New Year, both the Shanghai and Shenzhen stock market was halted halted for the day after the market took a 7 percent dive.
After an earlier 15-minute trading halt failed to stem the declines.he big drop triggered an automatic early closure under a new system to curb volatility that was rolled out, coincidentally, for the first time today. China introduced what basically amounts to a circuit breaker for the stock-market after last year’s summer rout saw stock prices swing at 18-year highs.
If the index falls seven percent the markets are closed for the rest of the day.
Analysts said Monday’s slumps were triggered by a combination of market factors and fundamentals.
“The market is worried about the upcoming lifting of the rule that bans shareholders from selling,” Central China Securities analyst Zhang Gang told AFP.
“The pressure will continue to weigh on the market in the following days.”
“It’s a poor start of the year with a lot of bad news,” said Win Udomrachtavanich, Bangkok-based chief executive officer at One AssetManagement Ltd.
China on Monday cut the yuan’s value against the US Dollar, making it weaker than 6.5 for the first time in nearly five years.
“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.