Markets perform better as China moves up yuan, suspends circuit breaker

By FXStreet FXStreet (Mumbai) – The circuit breaker mechanism which was introduced by China four days ago on the backdrop of a 7 per cent slide in stock markets on Monday has been suspended. In the first place, they were introduced to calm markets and soothe nerves of jittery investors.

However, the measure instead of reassuring markets caused investors to panic that they will be restricted from selling shares they want to get rid of. The introduction of the circuit breaker mechanism forced markets to conclude that Beijing was trying to avoid an inevitable market crash. Thus, the mechanism sparked more volatility and panic given that investors always find it beneficial to yank shares just selloff sets in.
Unfortunately for China the consequence completely contrasted its interests. To make matters worse, the authorities had to bear criticism from all quarters for their lack of communication and their desperate attempt to control price fall.

The circuit breaker was brought in on the very first trading day of 2016 to prevent free falling of stock prices. Once again the mechanism was brought into play within half an hour of trading yesterday, marking the shortest trading day in China in 25 years. Suspension of shares in …read more

Source:: FX Street