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Shanghai index up 0.33% as tax cut boosts small caps
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SHANGHAI stocks inched up today as small-cap media and technology companies gained after the government offered tax breaks for more small enterprises.
The key Shanghai Composite Index added 0.33 percent, or 6.95 points, to 2,105.24. Daily turnover was 87.4 billion yuan (US$14.3 billion).
Companies with annual income of 100,000 yuan or less will have their business income tax halved, retroactive to January 1 and valid until the end of 2016, the Ministry of Finance and the State Administration of Taxation said in a joint statement yesterday.
More small companies will benefit from the tax cut. Earlier in 2011 the State Council ruled that companies earning less than 60,000 yuan a year will have their income tax halved during 2012-2015.
The tax cut expansion came after the State Council announced a package of stimulus measures last week, such as more spending on shantytown removal and railway construction.
“The tax breaks will invigorate small companies, help employment and stabilize economic growth,” Shenyin & Wanguo Securities said in a note today.
Media firms gained. Beijing Gehua CATV Network Co Ltd jumped 7.5 percent to 9.13 yuan. Jiangsu Phoenix Publishing & Media Corp Ltd rose 2.1 percent to 9.34 yuan.
Hundsun Technologies Inc surged by the daily limit of 10 percent to 25.98 yuan. Weifang Beida Jadebird Huaguang Technology Co Ltd gained 3.5 percent to 5.07 yuan.
Analysts are divided over market outlook. CITIC Securities said today that the short-term market rebound is drawing to an end because economic growth may be weaker than expected in the second quarter.
But analysts at Guotai Junan Securities said a rebound of more than 20 percent may occur in the second quarter as enough weakness has been priced in and more capital is expected to flow back to the market.
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