China markets closed for day, after CSI 300 falls 7%

Chinese stock trading was halted for 15 minutes after the CSI 300 Index fell more than 5 percent.

Circuit breakers were triggered on Shanghai & Shenzhen exchanges as CSI 300 fell 5% initially and then fell 7% to close for the day.

Stocks fell as manufacturing contracted for a fifth straight month and investors anticipated the end of a ban on share sales by major stakeholders.

Under a new mechanism which is effective today, a move of 5% in the CSI 300 triggers a 15-minute halt for stocks, options and index futures, while a move of 7 percent close the market for the rest of the day.

The trigger seems to be China Caixin Manufacturing PMI for December which was lower than expectations at 48.2 as operating conditions faced by Chinese goods producers continued to deteriorate in December.

Production declined for the seventh time in the past eight months and data suggested that client demand was weak both at home and abroad, with new export business falling for the first time in three months in December.

Manufacturers continued to trim their staff numbers and reduce their purchasing activity in line with lower production requirements. Meanwhile, deflationary pressures persisted, as highlighted by further marked declines in both input costs and selling prices.