China plans 'circuit breakers'

In a joint statement late Monday, the Shanghai and Shenzhen stock exchanges announced they would halt all trading in shares for 30 minutes if the country's CSI 300 index rose or fell by 5 percent or more. Swings of 7 percent would halt trading for the rest of the day.

The CSI 300 lists China's 300 largest firms, including banking giant ICBC and energy companies PetroChina and Sinopec.

The mechanism, dubbed "circuit breaker," was to be used to "prevent market risks" and foster the "long-term stability and healthy development of the securities market." It would mainly affect trading in A-shares, which are favorites among Chinese citizens, and include futures trading in those shares, too, the statement added.

Cooling investors' nerves

The move is the latest step taken by officials eager to control a busting stock market bubble that has seen Chinese stocks slump by around 40 percent since mid-June, after gains of more than 150 percent in the previous 12 months.

In the wake of the stock market rout, China has launched an extraordinary package of measures to prop up stock prices, including the suspension of new listings, establishing a state-backed rescue fund, and allowing pension funds to buy shares.

US investment bank Goldman Sachs has estimated the Chinese government has spent 1.5 trillion yuan ($234 billion, 210 billion euros) to support its stock market over the last three months.

The introduction of circuit breakers has already been approved by the market watchdog, the China Securities Regulatory Commission (CSRC). The two bourses, however, didn't give a starting date for the launch, saying they would first seek public opinion about the move until Sept. 21.

In a separate move, the finance ministry said Monday that China would offer investors who hold shares for more than a year full relief from a 20 percent dividend tax, with those holding for more than a month only having to pay half the tax.

uhe/cjc (AFP, dpa, Reuters)