China to suspend all trading when stock markets volatile

SHANGHAI: China plans to halt all trading on its stock markets if they move five per cent or more, according to a statement from the country’s two exchanges, as authorities seek to control a rout.

If the CSI 300 index of 300 major listed companies rises or falls five per cent, authorities will suspend trading on both the Shanghai and Shenzhen exchanges for 30 minutes, the bourses’ statement said.

But if the index — which includes companies such as banking giant ICBC and energy majors PetroChina and Sinopec — gains or rises seven per cent, trading will be stopped for the rest of the day, it said.

The mechanism — dubbed a “circuit breaker” — will “prevent market risks” and foster the “long-term stability and healthy development of the securities market”, the statement late on Monday said.

The move is the latest step taken by officials as they try to control the bursting of a bubble that has seen the benchmark Shanghai Composite Index slump by around 40 per cent since mid-June, having risen more than 150 per cent in the previous 12 months. After the rout, China launched an extraordinary package of measures to prop up stock prices, including funding a state-backed company to buy shares, in policies widely criticised as counter to pledged market reforms. investment opportunities.

The central bank’s call, expected later this month, has been muddied by the China crisis as well as a disappointing jobs report on Friday.

Japan on Tuesday said its economy shrank less than expected in April-June, although analysts said the figures were unlikely to ease pressure on its central bank to widen its bond-buying stimulus, which effectively prints money.

While the 0.3 per cent contraction was better than the 0.4 per cent first announced and the 0.5 per cent forecast, Marcel Thieliant, Japan economist at Capital Economics, said “the details were hardly reassuring”.