China markets shut after 870 seconds of trading

China-Hong-Kong-Asia-700x450.jpgTrading on the Chinese stock markets was halted for the second time this week, after just 870 seconds of trading.

The circuit-breakers introduced in the New Year were triggered again today after the market fell more than 5 per cent, starting a 15 minute halt to trading.

However, when trading resumed markets fell by another 2 per cent, which means trading is halted for the day.

So far this week the CSI 300 index, the top 300 stocks of the Shanghai and Shenzhen stock markets, has fallen by 12 per cent in total.

The dropping value of the renminbi, which fell to its weakest level in almost five years today, was thought to be behind some of today’s losses.

Monday saw the first market closure thanks to the new circuit breakers, with the losses being attributed mainly to weak factory survey data released over the weekend, as well as steadily weakening yuan.

The rapid closure of the markets today has led to calls for the circuit breakers to be re-thought.

“Clearly the circuit breaker is having the opposite affect to what is intended and is making things worse. It also stops the market having any chance of bouncing,” says Mark Dampier, head of investment research at Hargreaves Lansdown.

“Had it been introduced during 2015, it would have been triggered 20 times. The system doesn’t work and until it is withdrawn or modified we can expect to see further use and perhaps shorter trading periods than we saw last night.”

“The interference by the authorities is simply delaying the inevitable. The market needs to find its own level so we will see more volatility in global markets until it does,” he adds.