Shares in China suspended after wild price crash

The ASX200 could come under more pressure tomorrow.

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares in China's benchmark CSI300 Index were reportedly suspended from trade today after plunging 7 per cent in the first trading day of 2016 in an inauspicious start to the new year.

Reuters is also reporting that part of the selling may be related to the fact that a government imposed ban on share selling by major investors is about to expire in what could be another fault line for an equity market likened by some to a crazy casino.

Notably, this casino though has a kind of 'responsible gambling' 7 per cent stop loss limit, which is imposed by the Chinese government itself in an interesting attempt to put the free market genie back in the bottle.

Despite today's big price falls China's leading index is only down 3.8% over the past year and on that basis has actually outperformed the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO), which is down around 4.2% over the past year.

However, nothing puts the fear of god up global investors like the prospect of a hard landing for the juggernaut Chinese economy that is relied upon by emerging market and commodity-linked economies like Australia to help generate their own growth.

Today's selling in China was attributed to weaker-than-expected manufacturing data, which suggests that economic activity is slowing and this may feed through into the dreaded demand slowdown.

Other global issues fueling the bears include escalating tensions between Middle Eastern oil producers and sworn enemies Iran and Saudi Arabia. The latest fallout over a recent round of executions carried out by the Saudis.

Investors though will likely remain more fixated on Chinese economic data as its large effect on sentiment is often a key driver behind the short-term direction of equity markets.

It could be another down day for ASX investors tomorrow, especially if the major European and US markets follow China down overnight.

Motley Fool contributor Tom Richardson has no position in any stocks mentioned. You can find Tom on Twitter @tommyr345 Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »