China’s stock market was off to a poor start in the new year as the Shanghai Composite Index plunged by 7%. The CSI 300 Index – a benchmark for the largest 300 listed stocks in Shanghai and Shenzhen – also declined by 7%. The steep decline compelled authorities to trigger the recently implemented stock market circuit breaker to halt trading in order to curb panic selling by investors. This marks the biggest ever decline on the first trading day of the year.
Hao Hang, managing director at Bank of Communications Co., said, “The circuit breaker system actually creates a downward spiral [and it] is actually making the selling worse.” China’s new circuit-breaker mechanism will trigger trading suspension for the rest of the day after a drop of around 7% from the previous closing price.
