An investor looks at an electronic board displaying stock information at a brokerage house in Shanghai, China, July 6, 2018. Reuters/Aly Song Acquisition of license rights
HONG KONG/BEIJING, Aug 25 (Reuters) – Chinese authorities are planning to slash up to 50% of stamp duty on stock transactions to further boost the country’s struggling stock market, people familiar with the matter said. Three people have said. .
Regulators, including the finance ministry, submitted a draft proposal to the Cabinet earlier this month under the guidance of the State Council, adding that a decision could be announced as early as Friday, two people familiar with the matter said.
A proposal to cut the current 0.1% stamp duty on securities transactions suggests a 20% or 50% cut, the first cut since 2008, the officials said.
The amount of the reduction has not been reported so far, but it is likely to be set at 50%, he said.
All sources declined to be anonymous because they were not authorized to speak to the media.
The State Council Information Office, which handles media inquiries on behalf of the government, did not respond to a faxed request for comment. The Ministry of Finance and the China Securities Regulatory Commission (CSRC) also did not react.
The cuts come after China’s leaders pledged in late July to revive the world’s second-largest stock market, reeling from signs of economic recovery and a deepening debt crisis in the property market. was done.
“These policies will boost the market in the short term, but they won’t have much of an impact in the long run,” fund manager Hsieh Cheng said. has potential,” he said.At Shanghai Jianwen Investment Management Co., Ltd.
“A reversal of the long-term trend in the market will be driven not by stamp duty cuts, but by expectations of economic improvement.”
The country’s blue chip CSI300 index (.CSI300) falls to a nine-month low as hopes of a strong post-coronavirus economic recovery fade away, policy makers reluctant to deploy stronger stimulus The stock fell 11% from its April high as it showed a strong stance. By comparison, the MSCI World Stock Index (.MIWO00000PUS) is up 11% year-to-date.
slower growth
Growth in the world’s second-largest economy slowed in the second quarter on weak demand at home and abroad, prompting analysts to slash their growth forecasts for this year in the absence of major support measures.
Against this backdrop, the Chinese government took a series of steps to support the market earlier this week, including smaller-than-expected cuts in key lending indicators and other measures.
But this modest stimulus has so far failed to satisfy investors seeking a stronger policy response, including huge government spending.
In the latest such move, the People’s Bank of China (PBOC) has asked some domestic banks to scale back their outbound investments through the Bond Connect scheme, Reuters reported early Friday, citing people familiar with the matter. .
China’s securities regulator on Aug. 18 unveiled a series of proposals to support the country’s $11 trillion stock market, including supporting share buybacks and encouraging long-term investment.
The CSRC also said stabilizing the stock market was a priority. “Without a relatively stable market environment, there is no basis for stimulating the market and boosting sentiment.”
The reduction or exemption of stamp duty, including stock trading, may be decided by the State Council based on the needs of the country’s economic and social development.
China’s fiscal revenue totaled 20.37 trillion yuan ($3.02 trillion) last year, of which 276 billion yuan (1.35%) came from stamp duty on securities transactions, according to official data.
Earlier this month, Bloomberg first reported that Chinese authorities were considering lowering stamp duty on stock transactions.
Huang Yan, general manager of Shanghai Qiyang Capital, a private fund manager, said the cut in stamp duty meant little for a market lacking confidence in the economy.
“The economy is in a terrible state,” Huang said. “Reducing the stamp duty will not solve the problems that hinder China’s economic growth.”
Reported by newsrooms in Hong Kong and Beijing. Additional coverage by Shanghai Newsroom.Editing: Smeet Chatterjee, Lincoln Feast, Kim Coghill
Our criteria: Thomson Reuters Trust Principles.