Mainland Chinese stock markets tumbled 7 percent in the year’s opening session Monday, forcing exchanges to suspend trade for the first time.
Early losses quickly snowballed in the afternoon, and trading was suspended at around 1:30 p.m., about 90 minutes before the regular close.
Selling intensified after a brief 15-minute trading halt early in the afternoon when the main indexes had shed 5 percent, and activity in Shanghai and Shenzhen was halted for the day soon afterward.
It was the first day that the “circuit breakers”, intended to curb volatility, were in effect.
The blue-chip CSI300 index declined 7 percent to 3,470.41 points, while the Shanghai Composite Index fell 6.9 percent to 3,296.66.
Hong Kong’s Hang Seng Index was pulled down 3 percent in response.
A private survey report early in the day showed China’s factory activity contracted for the 10th straight month in December, and at a sharper pace than in November.
An official survey on Friday, which focuses on larger, state-owned firms, showed a fifth month of contraction, though a pick-up in the services sector could cushion the impact on the broader economy.
Investors dumped stocks ahead of the imminent expiration of a ban on the selling of shares by listed companies’ major shareholders, which had been imposed during the market crash in the summer.
“The slump apparently triggered intensified selling, while the triggering of the circuit breaker seems to have heightened panic, as liquidity was suddenly gone, and this is something no one has experienced before,” Gu Yongtao, a strategist at Cinda Securities, was quoted as saying.
“It was a stampede.”
– Contact us at [email protected]