The first week of trading in the new year got off to a rocky start as the Chinese stock exchange halted trading for the second time this week. This morning the Chinese Stock Exchange lost 7 percent of value and exchange officials halted trading after 14 minutes. Twenty-nine minutes after the opening bell, the exchange suspended its circuit breaker protocols, ceased trading for the day and sent floor traders and brokers home.
At presstime, the Dow Jones Industrial Average is down 143 points or -0.65 percent. The price of oil plummeted $33 a barrel to a near 12-year low due to worries over weaker demand from China and an over-supplied market, reports NBC News.
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The apparent cause of the roiling Chinese markets is a slowing Chinese economy and economic reports of a poor quarter. This was the same speculation when the U.S. markets went south on August 24th.
Chinese stock exchange officials have reportedly suspended its circuit breaker policy. The cessation of trading in the Chinese markets did not have the intended calming effect on investors. Instead of allaying fears and boosting confidence in the markets, the trading halts seemed to have inspired investor panic.
According to NBCNews:
The China Securities Regulatory Commission later suspended its so-called circuit breaker system, which suspends trading for 15 in the event of a 5 percent selloff and halts it for the day if it reaches 7 percent, as happened Thursday. The move appeared to be an acknowledgement that the newly rolled out system was exacerbating panic selling.
As Chris Buckley, a New York Times reporter in China, posted on Twitter: CSRC statement on ending “circuit breaker” has a Wodehousian flavor. “It did not achieve the anticipated outcome.”
