“No trading, no pain” is one phrase making the rounds in China to describe the sentiment toward China’s volatile stock markets, as more than half listed firms filed applications to halt trading of their shares, an unprecedented move to avoid plummeting stock prices.

The phrase went viral on Sina Weibo, China’s version of Twitter, and re-tweeted more than 2m times on Tuesday when over 700 companies suspended trading on the Shanghai and Shenzhen exchanges. Many are small and mid-cap firms.

About 1,500 companies have filed for suspensions, accounting for more than half of all stocks listed in China. The benchmark Shanghai composite Index dropped as much as...