Chinese shares swung wildly on the first day of trade after authorities lifted a "circuit breaker" mechanism, introduced to prevent sharp falls. The central bank has set the yuan higher, after eight days of weakening.
The China Securities Regulatory Commission (CSRC) said late Thursday that it wasshelving the "circuit breaker,"
which it had introduced at the beginning of the year.
"After weighing advantages and disadvantages, currently the negative effect is bigger than the positive one," the CSRC said in a statement.
The mechanism was meant to calm China's notoriously unstable markets, which plunged in mid-2015. The "circuit breaker" functions by automatically suspending trading for 15 minutes if shares fell by five percent in one day, and closing them for an entire day if they dropped seven percent or more.
Dealers criticized the measure, however, saying that the system heightened selling pressure from traders who wanted to avoid being stuck with shares they did not want to hold.
As investor confidence grew on the new measures on Friday, the benchmark Shanghai Composite Index and the Shenzhen Composite Index, which tracks stocks on China's second exchange, both opened more than two percent higher on Friday.
Minutes later, however, they reversed the gains, with the Shanghai index down 0.68 percent, or 21.15 points, to 3,103.85, and the Shenzhen indicator dropping 1.80 percent, or 35.22 points, to 1,922.87.
Yuan set at firmer rate
Also on Friday, the People's Bank of China raised the yuan's guidance rate for the first time in nine trading days to 6.5646.
The central bank allowed the currency's biggest fall in five months on Thursday, sending shockwaves through regional currency and global stock markets as investors feared it would trigger competitive devaluations.
ksb/rc (Reuters, AFP)