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Wan LixinOpinion deputy editor of Shanghai Daily
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Room to move on stamp duty tax - chairman
By Winny Wang |
March 5, 2009, Thursday
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Online Edition
Online Edition
CHINA has room to cut stamp duty on stock trading further, China's Securities Regulatory Commission chairman, Shang Fulin, said today.
"I haven't heard about a further stamp duty cut so far, but there is room for such a move if necessary," Shang told reporters in Beijing today.
China cut stamp duty on share trading twice last year to boost the sagging stock market. In April, the regulator lowered the duty to 0.1 percent from 0.3 percent and it scrapped tax on share purchases in September.
"The stamp duty is at an extremely low level at present and the regulator wouldn't further lower it in the short term," said Qian Qimin, an analyst of Shenyin Wanguo Securities Co.
Shang also said that the commission is studying reforms to initial public offerings procedures to seek a more market-oriented process and prevent speculation.
The commission introduced a price-setting mechanism in 2005 to regulate companies which seek domestic listings to price new shares through negotiations with at least 20 institutional investors.
Under the rule, prices of IPO shares were to be ultimately fixed based on demand for the shares on offer and market sentiment. A price range was to be worked out in consultation with institutional investors, including fund managers, domestic brokerages, qualified foreign investors and trust firms, finance companies and insurers.
However, some institutions were found to have quoted unreasonably high prices during the initial consultation with underwriters, driving up the stock price. The institutions then chose not to bid for the stocks while underwriters earned higher commissions from the higher prices.
Others were found to have deliberately quoted lower prices to pull down the stock's offer price so that they could earn more money after the shares went to the market as they usually soared on mainland debuts.
"I haven't heard about a further stamp duty cut so far, but there is room for such a move if necessary," Shang told reporters in Beijing today.
China cut stamp duty on share trading twice last year to boost the sagging stock market. In April, the regulator lowered the duty to 0.1 percent from 0.3 percent and it scrapped tax on share purchases in September.
"The stamp duty is at an extremely low level at present and the regulator wouldn't further lower it in the short term," said Qian Qimin, an analyst of Shenyin Wanguo Securities Co.
Shang also said that the commission is studying reforms to initial public offerings procedures to seek a more market-oriented process and prevent speculation.
The commission introduced a price-setting mechanism in 2005 to regulate companies which seek domestic listings to price new shares through negotiations with at least 20 institutional investors.
Under the rule, prices of IPO shares were to be ultimately fixed based on demand for the shares on offer and market sentiment. A price range was to be worked out in consultation with institutional investors, including fund managers, domestic brokerages, qualified foreign investors and trust firms, finance companies and insurers.
However, some institutions were found to have quoted unreasonably high prices during the initial consultation with underwriters, driving up the stock price. The institutions then chose not to bid for the stocks while underwriters earned higher commissions from the higher prices.
Others were found to have deliberately quoted lower prices to pull down the stock's offer price so that they could earn more money after the shares went to the market as they usually soared on mainland debuts.
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