Chinese stock exchanges closed early for the second time in four days after the Shanghai Composite Index dropped seven percent, marking another milestone in the nation's inauspicious start to 2016.
The trading of shares and index futures was halted by automatic "circuit breakers" from about 9:59 a.m., which were implemented in an attempt to prevent a repeat of last year's market crash, according to Fox News.
Under the mechanism, a five percent increase or fall in the CSI 300 would trigger a 15-minute trading halt for stocks, options and index futures, while a seven percent increase or fall would cause trading to stop for the rest of the day.
Though similar circuit breakers are implemented in major markets around the world to give investors a chance to calm down when major increases or deficits occur, analysts believe that the opposite has occurred in China, with investors using the cooling-off period to line up further sell orders.
"The efficacy of the circuit breaker is questionable in a highly volatile environment driven by a herd mentality," noted Kamel Mellahi of Warwick Business School, according to CNN Money.
Evidence suggests that this might be the case.
The CSI 300 fell five percent within 10 minutes of opening on Thursday, triggering the initial 15-minute trading halt. However, after trading resumed, the fall extended to seven percent, bringing trading to an end for the rest of the day and marking its shortest trading day in its 25-year history, according to The Wall Street Journal.
In light of its poor trading day, coupled with the one that came four days before it, onshore-traded yuan is down 1.5 percent for the year, while offshore yuan is down 2.7 percent, marking a record low against the U.S. dollar.
