Update | China stocks tumble 7pc, forcing 2nd emergency shutdown this week
Analysts say Beijing may need to adjust circuit breaker rules to promote market liquidity
Chinese stocks slumped more than 7 per cent on Thursday, triggering an emergency shutdown after just 13 minutes of trade, marking the second time this week markets haver been shuttered for the day and sending shock waves that rattled equity markets across Asia.
In a late announcement on Thursday, the Shanghai Stock Exchange said that the circuit breaker mechanism will be suspended with immediate effect.
Deng Ke, a spokesman for the China Securities Regulatory Commission, said in a statement that the mechanism was implemented to avoid turbulence in the stock market, but it has not achieved its anticipated aims.
“The negative impact now has exceeded the positive side,” Deng said. “In order to protect the stability of the stock market, the CSRC has decided to suspend the mechanism.”
The CSRC will learn from the experience, and study ways for improvement, Deng added.
The announcement follows a dramatic trading day that saw Hong Kong stocks dragged down, as were other major markets in Asia and Europe, amid fears over the volatility in China’s equity markets and a rapid decline in the Chinese yuan.