Chinese shares tumbled heavily in the morning session on Monday, the first trading day of 2016, with the benchmark Shanghai Composite Index nose-diving over 4 percent.
At 10:16 a.m. the benchmark Shanghai Composite Index slumped 4.03 percent and the smaller Shenzhen index plunged 5.22 percent. The ChiNext Index, China's NASDAQ-style board of growth enterprises, plummeted 5.5 percent. The A-share market's tumble coincided with the launch of a "circuit breaker mechanism" designed to curb wild swings in the stock market.
The mechanism will follow changes in the Hushen 300 Index, which reflects the performance of China's Shanghai and Shenzhen stock exchanges. When the index rises or falls by 5 percent, the circuit breaker will be triggered with a 15-minute suspension in stock trading.
Market analysts attributed the slump in part to lower-than-expected manufacturing activity, which dented market sentiments.
The Caixin General China Manufacturing Purchasing Managers' Index (PMI), an indicator of manufacturing activity, edged down to 48.2 in December from 48.6 in November, according to the survey conducted by financial information service provider Markit and sponsored by Caixin Media Co. Ltd on Monday.
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