China suspends stock market circuit breaker after second crash

China today suspended the stock market "circuit breaker" mechanism which has halted trading in Chinese stock markets for the second time this week, triggering a cascading impact on the global markets as the country saw the shortest trading time in the Communist giant's market history.
China, the world's second largest economy, announced that it will from tomorrow suspend the stock market circuit breaker mechanism that has been implemented since the beginning of this year, state-run Xinhua news agency reported.
"Currently, negative effects of the mechanism are larger than positive effects. Thus, the China Securities Regulatory Commission (CSRC) decides to suspend the circuit breaker mechanism to maintain market stability," CSRC spokesman Deng Ke said in a statement.

The circuit mechanism which was put in place to avert steep crashes witnessed in the recent past halted the trading at the Shanghai and Shenzhen bourses after shares tumbled 7 per cent within the first 30 minutes of trading.
It was the shortest trading time in China's capital market history.
This is the second time the circuit breaker has halted trading this week, after a similar plunge on Monday triggered the circuit breaker, the first day the mechanism took effect.

The mechanism follows the Hushen 300 Index, which reflects the performance of bluechips listed in Shanghai and Shenzhen.
When the index rises or falls by five per cent, the circuit breaker imposes a 15-minute suspension in trading.

If the Hushen 300 declines by over seven percent, trading is halted for the day.
At 9:42 am, trading was suspended for 15 minutes after the Hushen 300 dropped by over five per cent.
The index dived a further two percent in just two minutes after reopening at 9:57 am, and trading was ceased.
In the end, the Hushen 300 Index plunged 7.21 per cent to close at 3,284.74 points. The benchmark Shanghai Composite Index was down 7.32 per cent to close at 3,115. 89 points. The smaller Shenzhen index lost 8.35 per cent to close at 10745.47 points.
The ChiNext Index, China's NASDAQ-style board of growth enterprises, dropped 8.66 per cent to close at 2,254.52 points.

Market sentiment is rattled, as a six-month ban on share sales imposed on listed companies' major shareholders during the stock market rout this summer will expire tomorrow.
The imminent deadline of the rule raised possibilities of a massive sell-off, state-run Xinhua news agency reported.
China Securities Regulatory Commission (CSRC) promised it would soon roll out new measures to better standardise stock sales.