Chinese regulators, seeking to arrest
a 14 percent slide in the nation’s stock market since this
year’s high on March 2, reduced transaction fees on equities
trading by 20 percent.
The reduction will take effect Sept. 1 and save investors
600 million yuan ($94 million) in transaction-related fees in
the final four months of the year, the China Securities
Regulatory Commission said on its website yesterday. Separately,
the official Xinhua News Agency said that China is also
considering a cut in stamp duty on share trading.
The reduction follows a July 31 announcement by the
Communist Party’s Politburo that pledged to continue adjusting
policies to ensure stable economic growth. The Securities Times
said in a front-page commentary the same day that the government
should introduce measures to stabilize the stock market and
boost investor confidence.
“The government wants to be seen doing something
politically,” Andy Xie, an independent economist who was
formerly Morgan Stanley’s chief Asia economist, said yesterday
in a telephone interview. “There’s a confidence crisis in the
stock market and there’s a perception that the stock market is a
trap and doesn’t reward investors.”
China’s benchmark Shanghai Composite Index (SHCOMP) fell 5.5 percent
last month, the worst-performing market in Asia, on concern an
economic slowdown is deepening and as Europe’s debt crisis
hampers exports to China’s biggest trading partner. The nation’s
economy grew 7.6 percent in the second quarter, the slowest pace
since 2009. Profits for industrial companies fell 1.7 percent in
June, declining for a third straight month.
CSRC Reforms
The lower fees are the latest measure to boost investor
sentiment. The CSRC in recent months urged listed companies to
pay more cash dividends and changed how initial public offerings
are priced. Chinese publicly traded companies, especially those
whose stock prices are below their book values, have obligations
to buy back shares, the China Securities Journal said yesterday,
citing an unidentified CSRC official.
“It’s one piece of good news out of all the bad news that
has come out,” said Hao Hong, Hong Kong-based managing director
for research at Bocom International Holdings Co. “It won’t
change anything for investors unless there is a change in
economic growth and earnings growth.”
The People’s Bank of China has cut interest rates twice
since early June and lowered lenders’ reserve requirement ratio
three times starting in November as part of the government’s
efforts to boost credit and support economic expansion.
Stamp Duty
Over the past five years, the Shanghai index has been the
worst performer among the world’s 10 biggest stock markets with
a 52 percent slide, according to data compiled by Bloomberg. The
index dropped 0.6 percent yesterday.
The government last cut the stamp duty on Sept. 19, 2008.
It’s a levy on share transactions imposed by the finance
ministry that’s considered the costliest of equity fees.
“When we cut the stamp duty, it’s always followed by a
technical rebound,” Hong said. In the second week of 2008, they
cut the stamp duty and also the interest rate. We had a small
rebound, but we all know from September to November stocks went
down substantially further.’’
Trading charges will also be cut as much as 26 percent for
futures exchanges in Shanghai, Zhengzhou and Dalian, the
securities regulator said yesterday. The China Financial Futures
Exchange will reduce transaction fees by 28.57 percent, it said.
Futures Fees
As a result, futures market costs may drop by 1 billion
yuan, the CSRC said. The Shanghai and Shenzhen bourses earlier
lowered fees levied for trading A shares by 25 percent on June
1. The regulator also reduced supervision charges on the
nation’s stock and futures exchanges this year.
“The cut in trading fees itself won’t have a big impact on
the market,” said Zhang Ling, general manager at Shanghai River
Fund Management Co. “But the prospect that the government will
follow up with more market-boosting measures such as the
suspension of IPO sales going forward may have investors
reacting more positively.”
To contact Bloomberg News staff for this story:
Zhang Shidong in Shanghai at
szhang5@bloomberg.net;
Michael Wei in Shanghai at
mwei13@bloomberg.net;
Allen Wan in Shanghai at
awan3@bloomberg.net;
Eleni Himaras in Hong Kong at
ehimaras@bloomberg.net
To contact the editor responsible for this story:
Shiyin Chen at
schen37@bloomberg.net
