Markets

China Slashes Stamp Duty on Stock Trades Starting Monday

 

China halved the stamp duty on stock trading effective Monday in the latest attempt to boost the struggling market amid a sputtering recovery in the world’s second-largest economy.

The finance ministry said in a brief statement on Sunday it was reducing the 0.1% duty on stock trades “in order to invigorate the capital market and boost investor confidence”.

China’s blue-chip CSI300 Index has dropped to nine-month lows, and is down 11% from an April peak, as hopes of a robust post-Covid economic recovery have fizzled and policymakers seem reluctant to roll out stronger stimulus. A deepening debt crisis in the property market has further marred investor sentiment.

 

Also on AF: Foreign Investors ‘Won’t Return Till China Starts Spending Again’

 

“Such a policy will likely give a short-term boost to the market but won’t have much effect over the long run,” Xie Chen, a fund manager at Shanghai Jianwen Investment Management Co, said before the announcement. “The rebound could last for just two to three days, or even shorter.”

Along with the finance ministry move, the China Securities Regulatory Commission (CSRC) is rolling out measures to shore up market confidence in investing in listed companies.

The CSRC said on Sunday that China will slow the pace of initial public offerings (IPOs) and further regulate major shareholders’ share reductions.

Meanwhile, stock exchanges in China have lowered their margin financing requirements, according to the CSRC’s announcement.

China’s leaders vowed late last month to reinvigorate the stock market – the world’s second largest.

Beijing has taken a series of measures, including a smaller-than-expected cut in a key lending benchmark last week. But investors are demanding a stronger policy response including massive government spending.

In the latest sign of economic weakness, data on Sunday showed profits at China’s industrial firms extended this year’s slump to a seventh month, with weak demand squeezing companies.

Profits at China’s industrial firms fell 6.7% in July from a year earlier, while earnings shrank 15.5% year-on-year for the first seven months.

 

  • Reuters, with additional editing by Vishakha Saxena

 

Also read:

China’s $13tn Provincial Debt Crisis Threatens to Spill Over

China’s Deleveraging Overdue, Debt Freezing the Economy: Dalio

Weak Demand Pushes China Into Possible Year-Long Deflation

China’s Diving Yuan Could Spark Next Crisis, Hedge Fund Warns

China Needs a Rethink on State Spending to Lift Slowing Economy

Beijing Tells Law Firms to Scale Back China Risks in IPO Docs

 

 

Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has worked as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a trader and investor, she is keenly interested in new economy, emerging markets and the intersections of finance and society. You can write to her at vishakha.saxena@asiafinancial.com

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