China stocks swing in volatile trade with circuit breaker scrapped

A screen showing the stock information at a brokerage house in Nanjing, China, on Jan 7, 2016
A screen showing the stock information at a brokerage house in Nanjing, China, on Jan 7, 2016PHOTO: REUTERS

SHANGHAI (BLOOMBERG) - Chinese stocks swung between gains and losses as the government's dropping of new circuit breakers failed to ease volatility.

The Shanghai Composite Index slid 0.2 per cent at 9:55 am local time after gaining as much as 2.2 per cent. Regulators announced the mechanism would be suspended late on Thursday night after plunges this week repeatedly triggered the circuit breakers, which were implemented on Monday.

A falling yuan has also raised concern the economic slowdown is deepening. The central bank set the currency's reference rate slightly firmer on Friday.


GRAPHIC: AFP

"Retail investors are unhappy and blaming the circuit breaker for not being well-tested," said Thebes Lo, Hong Kong based vice president at Kim Eng Securities Ltd. "Given the deteriorating economy in China, the government does not want to risk any social unrest. So they're trying to comfort investors as much as they can in the near term."

While China's high concentration of individual investors makes its stock-market notoriously volatile, the extreme swings this year have revived concerns over the ruling Communist Party's ability to manage an economy set to grow at the weakest pace since 1990. The selloff has spread around the world this week, sending US equities to their worst-ever start to a year and pushing copper to the lowest levels since 2009.