China’s stocks were suspended from all trade yesterday after the CSI 300 stock index plummeted 5% just 13 minutes after the start of trading began. When trading then resumed, within just a few seconds it dropped another 2% to just over 7%. This steep decline triggered the market's circuit breaker for the second time in four days and led to China seeing its shortest ever trading day, with shares trading for just 14 minutes.
In Chinese mainland, the Shanghai Composite fell 7%, while the Shenzhen Composite plummeted over 8%. The CSI 300, the benchmark index to which China’s circuit breakers are set, toppled to over 7%. If the index rises or falls more then 5% all trading is paused for 15 minutes.
In response to this week's volatile trading, the China Securities Regulatory Commission announced that it would be scrapping the circuit breaker late last night.
This week's trading woes come as the Regulatory Commission recently issued new rules which cap the percentage of shares that major shareholders in certain companies can sell every three months in attempt to stabilize the markets. These new rules go into effect just before a temporary ban on share reduction of large shareholders, which has been in place for the last six months, expires today.
[Image via ECNS]
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