China stock market traded higher on January 6, recovering some of the steep losses made earlier this week on concerns about the economy.
The Shanghai Composite index was up 1.8% to 3,348.22 as measures from regulators to support the stock market started to have an impact.
Local reports said the securities regulator would keep in effect its ban on share sales by major shareholders until new rules were released.
The ban was set to expire on January 8.
It was put in place six months ago at the height of the mainland stock market sell-off over the summer and locked up an estimated 1.24 trillion yuan ($190 billion) worth of shares.
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The 7% plunge in the Shanghai market on January 4, which led to the suspension of trading for the first time, triggered a global equities rout.
Beijing’s decision on January 5 to inject cash into the falling market also helped soothe fears.
Economic data that suggested activity in China’s services sector expanded at its slowest pace in 17 months in December had little impact on investors’ confidence.
The Caixin/Markit purchasing managers’ index (PMI) fell to 50.2 from 51.2 in November. A reading above 50 suggests growth in the sector, while one below that suggests contraction.
Hong Kong’s Hang Seng index failed to match the positive run from the mainland market and was down 0.7% to 21,042.89.
Traders in the rest of Asia were cautious after a North Korean nuclear test heightened geopolitical tensions.
North Korea claimed that it had successfully tested a hydrogen bomb on January 6, drawing widespread criticism from around the world.
South Korea’s Kospi index finished down 0.3% to 1,925.43, but the index was already lower before the news of the bomb.
Japan’s Nikkei 225 index ended lower by 1% to 18,191.32, while Australia’s S&P/ASX 200 closed down 1.2% to 5,123.1.
Shares of Japanese electronics maker Sharp fell 3.3% after reports that the troubled tech company is expected to book an operating loss of at least 10 billion yen ($84 million) for the nine months to December.
China stock market extended losses in a volatile session, following January 4 suspension of trading which led to a global equities sell-off.
The Shanghai Composite fell 0.3% to close at 3,287.71 points, although it had opened more than 3% lower.
Hong Kong’s Hang Seng index also fluctuated through the day, and ended 0.7% lower at 21,188.72.
Trading in Shanghai was suspended on January 4 under a new rule designed to limit dramatic falls in markets.
However, regulators said on January 5 they may restrict stock sales to stem falls.
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The China Securities Regulatory Commission said it would consider restricting the proportion of shares that major shareholders could sell during a given period of time.
The Chinese central bank also injected an unexpected 130 billion yuan ($19.94 billion) into the market to keep borrowing costs down – in a move to reassure retail investors.
The measures, however, did little to prevent Chinese shares from falling in afternoon trade.
Analysts said investors were waiting to see if Beijing could stem the latest selling in Chinese stocks and whether more measures would be introduced.
The new “circuit breaker” rule that suspended trading nationwide for the first time on January 4 was created after sharp falls last summer and was meant to curb market volatility in China.
Yesterday’s 7% fall in China spooked global markets.
Overnight, US benchmark indexes lost up to 2% as concerns grew that the dive in the Chinese stocks was the start of another volatile period after last summer’s dramatic market rout.
Escalating tensions in the Middle East, which affected oil prices, also dented investors’ confidence.
Oil prices were flat after rising as much as 4% on Monday following the dispute between Saudi Arabia and Iran.
Japan’s Nikkei 225 index ended 0.4% lower at 18,374.00, while Australia’s S&P/ASX 200 closed down 1.6% at 5,184.43.
Only South Korean shares bucked the downward trend after a senior finance ministry official said the government would take action to stabilize the market if needed, following January 4 steep plunge. The Kospi finished up 0.6% at 1,930.53.
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