It’s been yet another historic day for the Chinese stock market with the whole shebang managing to shut itself down after just 15 minutes of trading.
At the beginning of the day, trading was suspended for 15 minutes after the CSI 300 stock index suddenly plummeted by 5%. After the short hiatus, trading was allowed to resume, and wouldn’t you know it, a few seconds later, the index was down 7%
At that point, the precipitous decline triggered the China stock market’s newly-installed “circuit breakers,” recently put into place by Chinese regulators in the hopes of evening out the recently very volatile markets. By 10:30 a.m., both the Shanghai and Shenzhen stock exchanges had hit the circuit breakers for the day, marking the shortest trading session in history.
When it was all said and done, the benchmark Shanghai Composite Index closed down 7.3% at 3115.89, while the Shenzhen Composite Index fell 8.3% at 1955.88.
This marks the second time this week that China has had to resort to halting its markets. On the first day of trading of the year, Shanghai shares shocked investors by plummeting over 7%. After just four days, the CSI 300 has already fallen 13% in 2016 with analysts beginning to question the logic behind its system of circuit breakers.
This collapse has observers, economists, buyers, sellers, really pretty much everybody worrying about the state of China’s markets and currency.
“The plunge was mostly caused by an expectation that the yuan will depreciate further, which will stress the currency market and raise worries over the country’s economic health,” explained Qian Qimin, an analyst at Shenyin Wanguo Securities.
To help fix the problem, China’s central bank has opted to inject $10.6 billion into its financial system, this comes after pumping in $20 billion on Tuesday. Who knows what tomorrow will bring?
China stock market: On the down side: you lose 7% On the plus side: you get a vacation day
— Patrick Chovanec (@prchovanec) January 7, 2016
China now requires all stock charts to be rotated 90 degrees, turning today’s plunge into gentle bull market pic.twitter.com/4RgKHHWmWF
— Daniel Lin (@DLin71) January 7, 2016