The New Year’s miracle did not happen for the Chinese stock market. The first trading session of 2016 was marked by a record slump of the Shanghai Composite. After a massive plunge, the trading was automatically halted.
January 4, 2016 will obviously remain a ‘black day’ for China’s equity market. Independent observers have already called it the worst first day of trading the Chinese stock market has ever experienced. The situation was so dramatic that trading was halted two times and both of them were caused by brutal decline in shares. First, the Shanghai Composite lost 5 percent at a time. As a result, all trading was suspended by 15 minutes. In China, a new circuit breaker mechanism is applied to the stock market. The main driver of such drastic measures is sharp swings in equities. However, a brief suspension could not reach a desired effect, and shares extended losses. When the Shanghai Composite fell by 6.9 percent to 3,296.66 levels, the Chinese authorities took a unanimous decision to halt trading for the rest of the day.
The Shenzhen Stock Exchange is reported to undergo a more severe crash. The Shenzhen Composite collapsed by 8.2 percent. Probably, the situation will improve on the threshold of Lunar New Year which may bring a steady growth for China’s stock indices.
