Hong Kong (AsiaNews) - Just half an hour after stock markets opened (15 minutes, to be precise), trading was suspended on the the Shanghai and Shenzhen exchanges for the rest of the day after they racked up losses of more than 7%. It is the second time in a week (the first was on January 4) that China has closed down its markets thanks to a new rule that suspends trade when losses exceed 5%.
Today’s collapse is a further sign of the slowdown of the Chinese economy and that this slowdown is spreading its influence to the rest of the Asian markets and worldwide.
This morning, the Shanghai index fell 7.3% only 13 minutes after opening. In these first days of the year the index fell 12%, burning all the gains made in 2015. The CSI 300 (which measures both the Shanghai Stock Exchange and Shenzhen) fell by 7.2; the Shenzhen Composite Index lost 8.3% before closing.
The Regulatory Commission has announced that from 9 January and for three months, shareholders will not be allowed to sell more than 1% of their holdings in a given company. A similar restriction had been implemented in the previous six months and expires tomorrow.
The Hong Kong market has felt the repercussions from China and ended the morning session down 2.4%. Tokyo fell 1.7%; Sydney by 2.1 and Seoul by 0.9.
In an attempt to counter the weakening of the economy, the People's Bank of China has adjusted the value of the yuan to 6.5646 against the US dollar, bringing it to its lowest level since 2010, when the yuan was floated on currency markets, albeit in a managed way.
Analysts think that a currency devaluation will benefit Chinese exports, but in the long run may weaken the market and drive capital abroad. In addition, it could trigger a regional currency war.