5th January 2016
China’s New Year stock market woes continued on Tuesday following Monday’s halting of trading, which spurred on a global sell-off.
The Shanghai Composite index closed at 3,287.71 points, 0.26% or 8.55 down while the Hong Kong’s Hang Seng finished the session 0.65% down at 21,188.72.
On Monday trading on China’s market was suspended after steep losses triggered its so-called ‘circuit-breaker’ mechanism.
During the day traders witnessed the country’s Shanghai Composite index drop by 6.9% by 1.30pm local time and its blue chip index, the CSI 300 collapse by 7%.
In addition the technology led Shenzhen Composite fell by a harder 8.2%.
The losses are being attributed to weak factory survey data released over the weekend, a steadily weakening yuan and the possibility that a ban on stock sales by large shareholders may be about to be lifted.
BBC News reported that the China Securities Regulatory Commission said it would look at limiting the proportion of shares that major shareholders could sell during a given period of time.
China’s central bank also injected an unexpected £13.55bn into the market in a bid to keep borrowing costs down and reassure retail investors.
However the moves did not stem further market losses.
Commenting on the rough start to the year, Adrian Lowcock head of investing at AXA Wealth said: “2016 has got off to a rocky start as weak Chinese data reignites fears of a global slowdown which weighed on global markets last summer.
“China manufacturing data has fallen at a faster rate in December and raises concerns that global demand is slowing and the country is heading for a harder landing than initially anticipated. This is weighing on markets today and may continue to do so for a while.”