Stamp duty on stocks to stay
By Winny Wang |
August 14, 2009, Friday
|
Print Edition
Print Edition
CHINA is not likely to increase stamp duty on stock trading in the short term as the market is still fragile and a "bubble territory" has not appeared, some analysts said.
"The government won't raise stamp duty at present as the valuation of the market is still reasonable," said Wu Xiaoqiu, director of the Finance & Stocks Research Center of Renmin University.
The price-earning ratio of Sinopec and PetroChina, which account for half of the market value, is about 10 times their earnings on average, which indicates the valuation of the A-share market is still rational, Wu said.
"If there were bubbles in the market, the government may consider offering more stocks and accelerating initial public offerings rather than changing the stamp duty policy," Wu said.
The stamp duty for stock trading totaled 7.09 billion yuan (US$1.04 billion) last month, a jump of 152.25 percent from a year earlier, and turnover surged 53.5 percent to 7.09 trillion yuan from June. The rapid growth triggered investor concern that the government may raise stamp duty.
"Levying stamp duty (at the present level) is an important measure for the stock market and changing it should be used only when the market fluctuates wildly, but there have not been such wide fluctuations recently," said Jin Yanshi, an analyst at Sinolink Securities Co.
China cut stamp duty on share trading twice last year to boost the sagging stock market. In April, the stock market regulator trimmed the duty to 0.1 percent from 0.3 percent, and it scrapped a tax on share purchases in September.
"As the Shanghai Composite Index retreated from 3,400 points, raising stamp duty at present will rock the market," said He Qiang, a professor at Central University of Finance and Economics.
"The government won't raise stamp duty at present as the valuation of the market is still reasonable," said Wu Xiaoqiu, director of the Finance & Stocks Research Center of Renmin University.
The price-earning ratio of Sinopec and PetroChina, which account for half of the market value, is about 10 times their earnings on average, which indicates the valuation of the A-share market is still rational, Wu said.
"If there were bubbles in the market, the government may consider offering more stocks and accelerating initial public offerings rather than changing the stamp duty policy," Wu said.
The stamp duty for stock trading totaled 7.09 billion yuan (US$1.04 billion) last month, a jump of 152.25 percent from a year earlier, and turnover surged 53.5 percent to 7.09 trillion yuan from June. The rapid growth triggered investor concern that the government may raise stamp duty.
"Levying stamp duty (at the present level) is an important measure for the stock market and changing it should be used only when the market fluctuates wildly, but there have not been such wide fluctuations recently," said Jin Yanshi, an analyst at Sinolink Securities Co.
China cut stamp duty on share trading twice last year to boost the sagging stock market. In April, the stock market regulator trimmed the duty to 0.1 percent from 0.3 percent, and it scrapped a tax on share purchases in September.
"As the Shanghai Composite Index retreated from 3,400 points, raising stamp duty at present will rock the market," said He Qiang, a professor at Central University of Finance and Economics.
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