Chinese stocks dived Monday, prompting a trading halt for the rest of the session and sending stock markets in Asia Pacific lower following weak manufacturing surveys that renewed concerns over the stability of the country's economic recovery and soured hopes that the world's second-largest economy would enter the new year on better footing.
The CSI 300 briefly plummeted 7.02 percent. When that index rises or falls 7 percent, a trading halt in China's markets is triggered by the "circuit breaker" suspension mechanism for the rest of the session. The Shanghai Composite tumbled 6.85 percent to 3296.66 and the Shenzhen Composite plunged 8.1 percent.
Sales Ban Expiring
Investors dumped stocks ahead of the imminent expiration of a share sales ban on listed companies' major shareholders, which had been imposed during the market crash last summer.
Stocks in Australia, Japan, South Korea and India also fell. Energy plays, however, saw gains after oil prices bounced during Asian trading hours.
Hong Kong's Hang Seng index was also down 2.8 percent at 21,302.
Gavin Parry, managing director at Parry International Trading, attributed several factors contributing to the sell-off in the Chinese markets besides the lower-than-expected manufacturing report. He pointed to the geopolitical situation in the Middle East as a point of concern for market watchers with China having a sizable investment in Iran's oil industry. The escalation of Iran's tension with Saudi Arabia will add to the situation as will the hawkish comments from Federal Reserve about the pace of interest rate hikes during the coming year.