First day of 2016 trading in China ground to a standstill after a plunge in shares led to circuit breakers triggering on their first day of operation.
According to data compiled by Bloomberg, the CSI 300, an index consisting of 300 A-share stocks, dropped 7% while the Shanghai Composite Index slumped by 6.9%.
Under the new circuit breaker rules, which came into force on 4 January 2016, a 5% drop in the CSI 300 causes a 15-minute halt to trading while a 7% fall leads to the market closing for the day.
Shares continued to drop after the 15-minute halt causing the market to close at 1.34pm local time.
Regulators introduced the new circuit breakers in order to avoid panic selling following a number of events last summer including the Shanghai Composite closing down at 8.5% in August 2015.
Weak manufacturing is believed to have been a catalyst for the falling share prices, with the private Caixin China manufacturing purchasing managers’ index down to 48.2 in December.
Elsewhere Hong Kong’s Hang Seng index initially dropped by up to 4.4% before making slight recovery to close down 2.68%.
The Chinese losses had a knock on effect on trading in Europe with the FTSE 100 dropping 113.77 points, while Germany’s Dax index fell more than 3%.