China suspends circuit breaker

Report: It can aggravate the global financial crisis

Baku. 8 January. REPORT.AZ/ China will suspend its new stock market circuit-breaker mechanism - designed to stop free-falling prices - from Friday, the Shanghai and Shenzhen stock exchanges have said.

The mechanism, which had been in place since the start of this year, suspends trading on China's main stock markets if stocks fall 7%.

That circuit-breaker was activated twice this week alone.

On Thursday, it was triggered within half an hour of trading.

That gave China's stock markets their shortest trading day in 25 years.

"After weighing advantages and disadvantages, currently the negative effect is bigger than the positive one. Therefore, in order to maintain market stability, CSRC has decided to suspend the circuit-breaker mechanism," a statement from the China Securities Regulatory Commission (CSRC) said.

The renewed share suspension in China caused global shares to fall sharply on Thursday, with Wall Street opening more than 1% lower and European markets trading 2% down.

Report's Analytical Group believes that suspending limit in case of China's stock exchanges will lead to a sharp sales in case of disclosing many negative factors. The stock market indices in other countries will lead to a sharp fall. As a result, the global financial crisis may even aggravate.

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