Shanghai Skyline
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Ellen Forster

Trading on China’s stock market suspended following share plunge

China’s principal stock market - the Shanghai Composite - has come to a halt after share dropped dramatically by 7 per cent.

When the market fell by 5 per cent, an automatic 15-minute trade suspension came into action under a new system to control the volatile market conditions. As shares continued to fall, the market’s regulators were forced to end trading early.

The Shanghai Composite fell 6.9 per cent to 3,296.66 points before trading was halted for the day.

Moves of 7 per cent from the previous session’s close would trigger a trading suspension for the day, under the new circuit breaker mechanism.

The measures, which were created after the market’s turbulent sell-off over the summer, came into effect for the first time on Monday.

A private survey showed China’s manufacturing activity slowed for the 10th straight month in December, and at a sharper pace than in November.

An official survey on Friday, which focuses on larger, state-owned firms, showed a fifth month of contraction, however a pick-up in the services sector could cushion the impact on the broader economy.

Gerry Alfonso, director at Shenwen Hongyuan Securities Co said: “While some softness in the manufacturing sector was to be expected, having two major indicators pointing towards the same bearish direction is clearly impacting the market.”

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