Asia Unhedged risks stating the obvious by noting that investors should expect more volatility in Chinese stocks. Ditto that for the yuan.

Currency depreciation will continue throughout 2016, predicted Brian Jackson, China economist at IHS Global Insight, in a note Thursday. “Even though official expectations seem aligned with that view, authorities remain likely to step in and punctuate rapid drops with stability or reversals, given their deference to gradualism and willingness to occasionally punish one-way bets in currency markets.”

With regards to the stock market policy, Jackson wrote, that implementation of the circuit breaker mechanism is so far exactly as laid out in policies set out in 2015, and thus is not a “surprise.” That said, its regular tripping indicates the thresholds are currently set too low, when in the third quarter of 2015 the mechanism would have tripped 20 times.

“Additional volatility in China’s stock market remains almost certain in the first half of 2016, given expectations of worsening GDP growth and continued downward pressure on the exchange rate, and thus frequent tripping of the circuit breaker or adjustments to stabilizing policies should not come as a surprise,” said Jackson. “For the time being, China’s stock market reform will remain a messy affair, but is not representative of reforms in other parts of the economy.”

“Investors should bear in mind that the China equity falls are more correlated with short-term psychological factors rather than the underlying China economic conditions,” Ben Luk, a global market strategist at J.P. Morgan Asset Management, wrote in a note.

In a more dour assessment, an AP story speculated that Thursday’s plunge in Chinese stocks “was just one in a series of aftershocks from last year’s boom and bust that could shake markets for months to come.”

Investment in Chinese equities is still too limited to have a telling effect on China’s economy when a market rout like the one over the last week occurs. It’s also our view that things will eventually settle down and Chinese stocks will resume their upward path. But such meltdowns are nonetheless unnerving and ripple unpleasantly across world markets.

China stocks repeated Monday’s dive and sank another 7% on Thursday after less than half an hour of trading. The plunge triggered the newly-introduced circuit breaker mechanism for the second time in the first week of the new year.

The CSI300 index, the index that triggers the circuit breakers, fell 7.2%, to 3,285 points, 30 minutes into Thursday’s session, hitting the 7% limit that halts all trades on both the Shanghai and Shenzhen markets for the rest of the day. When all trades were cleared the CSI300 settled down 6.9% to 3,294.

The Shanghai Stock Exchange Composite Index tumbled 7% to 3,125 and the Shenzhen Stock Exchange Composite Index plunged 8.2% to 1,958. The Chinext Price Index, a barometer for small stocks, sank 8.6% to 2,257 and Hong Kong’s Hang Send Index slid 3.1% to 20,333.

On Monday, the previous day the market plunged 7% to trigger the circuit breakers, shutting down the entire market, stocks fell on reports that factory output has contracted for the 10 straight month. On Thursday, the market tanked in reaction to the People’s Bank of China setting the yuan midpoint rate at 6.5646 per dollar prior to the onshore market open, 0.50% weaker than the previous fix 6.5314.

It was the biggest fall between daily fixings since August and the eighth day in row for the PBOC to set a lower guidance rate. Spot yuan fell to 6.5945 to the dollar, its weakest since February 2011, reported Reuters.

Currencies throughout Asia tumbled as well. The South Korean won hit a four-month low against the US dollar, while the Malaysian ringgit slumped to a three-month trough and the Singapore dollar touched a six-year low. The Australian dollar, often used as a proxy for China-related trades, fell to a two-month low of $0.7025, reported Reuters.

In reaction to the second halt in one week, China’s stock regulator took steps to prevent another dive on the day a six-month selling ban is lifted.

On July 8, in the midst of last summer’s stock-market meltdown, the China Securities Regulatory Commission banned large shareholders –those holding 5% or more of shares in listed companies — from selling stakes for six months. The ban was expected to expire on Friday, and many analysts said investors were selling in anticipation of a flood of sell orders when the ban ended.

On Thursday, the CSRC said major shareholders will only be able to sell 1% of their total shares outstanding within the next three months, according to a statement on the regulator’s website, reported Reuters.

Reuters reported that the agency also ruled that large shareholders must disclose their share reduction plans to the exchanges 15 trading sessions in advance. The new measures are aimed at “preventing concentrated share reduction” and “stabilizing market expectations,” the statement said.

The swings in China and Asia had a crushing effect on US stocks late Thursday.  The S&P 500 posted its largest daily drop since September as concerns over the health of the Chinese economy and a relentless slide in oil prices rattled investors.

The Dow Jones industrial average .DJI fell 392.41 points, or 2.32%, to 16,514.1, the S&P 500 .SPX lost 47.17 points, or 2.37%, to 1,943.09 and the Nasdaq Composite.IXIC dropped 146.34 points, or 3.03%, to 4,689.43.

It was the Dow’s worst four-day start to a year in more than a century.

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