An investor looks at a screen showing stock information, after the new circuit breaker mechanism suspended stocks trading, in Shanghai, China, January 7, 2016. Reuters/China Daily
China’s major stock indexes regained some ground on Friday after Beijing ditched a circuit breaker mechanism that halted trading twice this week and had been blamed for exacerbating the market sell-offs it was designed to limit.
The People’s Bank of China also raised its guidance rate for the yuan for the first time in nine trading days, having allowed the currency’s biggest fall in five months on Thursday, sending shivers through regional currencies and global stock markets as investors feared it would trigger competitive devaluations.
Chinese markets have had a turbulent start to 2016, buffeted by the PBOC’s lower yuan fixings against the dollar, two days of stock exchange suspensions, weak factory and service sector surveys, and worries about looming share sales by major stakeholders once a ban on such sales expires.
With the stocks circuit breaker deactivated late on Thursday, the CSI300 index .CSI300 closed up 2 percent at 3,361.56 points on Friday, while the Shanghai Composite Index .SSEC also closed up 2 percent at 3,186.41 points.
The CSI300 had lost around 12 percent in the first four trading days of 2016, giving up all the gains made in 2015.
The circuit breaker, which only came into effect on Jan. 4, came under fire for kicking in too soon with its initial pause in trading, and then encouraging a rush…