Welcome to 2016 where it was a case of déjà vu all over again as Chinese stocks took a great leap backwards on the first full day of trading for 2016.
Another round of slack economic figures out of China coupled with rising tensions between the Saudi and Iranian regimes put immediate pressure on the main Asian bourses. A larger than anticipated reduction in Chinese factory activity sparked renewed concerns of a possible hard landing for Asia’s largest economy.
Trading on both the Shanghai and Shenzhen stock markets was discontinued for the day on Monday after shares fell 7 per cent. The steep drop in the CSI300 index, which covers both exchanges, for the first time triggered an automatic early closure under a newly incorporated system to limit volatility.
Also a Rough Ride in the Region
Under the recently calibrated method which only went into effect on Monday, a move of 5 per cent in the CSI 300 triggers a 15-minute halt for stocks, options and index futures, while a move of 7 per cent brings a close of the market for the rest of the day. China introduced the stock-market circuit breaker to help calm volatility in the wake of the wild swings last year.
Around the rest of the region the first day back was also a rough ride with the Hang Seng China Enterprises Index in Hong Kong giving up 3.5 percent, while the Hang Seng Index lost 2.4 percent. Japan’s Topix index fell 2.4 percent and the Australian and Singaporean indexes both ended in negative territory.
