Chinese stocks regain after circuit breaker suspension

 The benchmark Shanghai Composite Index gained 2% to close at 3,186.41 points, after falling as much as 2.2% earlier Source: PTI  
The Union Cabinet had on September 2 last year approved MFP to bring idle fields of ONGC and OIL to production at the earliest so as to augment domestic production of oil and gas The circuit breaker, which came into effect on January 1, was triggered on Monday and Thursday, after the key Hushen 300 Index plunged 7% within the first 30 minutes of trading.
  Major Chinese stocks on Friday bottomed out after the securities regulator decided to terminate the controversial “circuit-breaker” mechanism that has halted trading twice this week, including after an abrupt sell-off on Thursday that led to heavy losses and spooked global markets. The benchmark Shanghai Composite Index gained 2% to close at 3,186.41 points, after falling as much as 2.2% earlier. The smaller Shenzhen index gained 1.2% to close at 10,888.91 points. The total turnover on the two bourses stood at 761.6 billion yuan ($116.03 billion), state-run Xinhua news agency reported. The stock market crashes followed fears sparked by reports this week that the world’s second-largest economy was headed for further slowdown. The circuit breaker, which came into effect on January 1, was triggered on Monday and Thursday, after the key Hushen 300 Index plunged 7% within the first 30 minutes of trading. It was the shortest trading time in China's market history. The stocks plunge on Thursday was also set off by concern Beijing is allowing its yuan to weaken too fast against the dollar. The People's Bank of China has allowed the yuan to decline by about 6% against the dollar since August. “Currently, the negative effects of the mechanism are greater than the positive effects. Thus, the China Securities Regulatory Commission (CSRC) decided to suspend the mechanism to maintain market stability,” a CSRC spokesperson said Thursday night. Sentiment was also lifted by a renewed government pledge to slash excessive industrial capacity in some sectors. Sub-indices related to coal mining, steel, and non-ferrous metal led the gains, all of which are mired in excess capacity. The extreme swings in Chinese markets this year have revived concern over the ruling Communist Party's ability to manage an economy set to grow at its weakest pace since 1990. During an inspection earlier this week in north China’s Shanxi Province, which is known for large coal reserves, Premier Li Keqiang had called for “unyielding effort” to eliminate excess industrial capacity to make way for new growth engines. Over 20 coal sector stocks rose by the daily limit of 10%.  

January 08, 2015 | 6:19pm IST.

The Dollar Business Bureau - Jan 08, 2016 12:51 IST
 
TDB Top