Epicentre China, India feels the shock as global markets prepare for aftershocks

China's Shanghai and Shenzhen stock exchanges both had to stop their trading activities for rest of the day on Thursday, second time in a week. The Shanghai declined by 7.04 per cent to 3125 on intraday basis. The other Shenzhen Composite Index, China's second exchange, dwindled by 8.24 per cent to 1958. The stock market collapsed within an hour after opening on fierce selling pressure. The Shanghai collapsed about 10.66 per cent over the period of one month.

The Chinese stock market fell because of new circuit breaker rules, which are designed to control market volatility. The world's second-largest economy witnessing trouble on ground level. The services PMI declined and stood at a 17 month low of 50.2 in December, down from 51.2 a month earlier.

On the first trading day of 2016 i.e. January 4, the China's Shanghai collapsed by 6.8 per cent and halted trading for the day at 3296.26. The Chinese stock market bleed on poor PMI data, a standard measure of factory activity. The Caixin PMI (Purchasing Mmanagers' Index) stood at 48.2 in December, from 48.6 in November.

Meanwhile, the new rules for trading in Chinese market will be applicable from January 9. The major shareholders must not sell more than 1 per cent of company's share capital through stock exchanges every three months. The major shareholders must have to file their plans for 15 trading days in advance of sales.

The People's Bank of China (PBOC) set the guidance rate to its weakest since March 2011. The chinese currency yuan is also declining trend and stood at 6.59 against USD on lowest level since February 2011. The PBOC's China Foreign Exchange Trade System (CFETS) is not intend for the yuan's continuous depreciation and claiming that it was stable against a basket of currencies in 2015.

The Chinese stock market halt has shaken the world's financial markets too. The European stock market started with fall of 3 per cent and FTSE also declined by 2 per cent. On the other hand, BSE SENSEX also declined by almost 2 per cent on an intraday basis. Overall China's economic slowdown is worrying the world. Within six months time period, the World Bank also has changed the forecast of global growth from 3.3 per cent to 2.9 per cent for 2016 from 2.4 per cent in 2015.