Hong Kong’s Monetary Secretary Paul Chan Mo-po cautioned in his weekly weblog on Sunday that merely reducing the tax on securities buying and selling wouldn’t essentially breathe new life into metropolis’s torpid inventory market, and added that piecemeal measures may very well be counterproductive.
That is his first touch upon the much-discussed subject of stamp responsibility on securities for the reason that formation of a 13-member activity pressure final week. The duty pressure, headed by securities regulatory veteran Carlson Tong Ka-shing, is ready to conduct a complete evaluate of the components liable for the lackluster efficiency of the inventory market and devise acceptable measures to rectify its structural points.
Citing an 8% decline within the benchmark Grasp Seng Index in August, and a day by day common turnover of HK$100 billion (US$12.7 billion), Chan highlighted in his weblog that the Hong Kong inventory market’s efficiency is much from supreme.
“There are calls available in the market for lowering the stamp responsibility, however statistics have proven that any discount can’t deal with structural points and stimulate turnover over the long term,” Chan wrote, warning that partial stimulus measures may not solely fail to revitalize the market however might additionally additional erode traders’ confidence.
The institution of the duty pressure was introduced by the federal government final Tuesday, with its mandate being to look at inventory market liquidity, scrutinize the itemizing regime, market construction, and buying and selling mechanism, all in a bid to strengthen the town’s standing as a worldwide monetary heart. The inventory trade is managed by the Hong Kong Exchanges and Clearing, which can also be tasked with vetting itemizing candidates.
Chan expressed confidence that the duty pressure, drawing upon the experience of monetary heavyweights and regulatory specialists, would assess the inventory market’s strengths and challenges and formulate methods for the brief, medium, and long run. He added that the duty pressure members would convene for the primary time this week.
The Monetary Secretary’s remarks got here within the wake of mainland China’s abrupt choice final week to halve the stamp duties fee to 0.05% on its inventory exchanges, a transfer that prompted some native stockbrokers, monetary sector lawmaker Robert Lee Wai-wang, and Government Council convenor Regina Ip Lau Suk-yee to advocate for the same strategy in Hong Kong.
Chan, nonetheless, identified that regardless of a 30% hike in stamp responsibility to 0.13% in 2021, the typical day by day turnover of securities buying and selling rose by 2% year-on-year between August and December of that 12 months. He additional famous that the inventory turnover fee had elevated to 0.27% in 2022, up from 0.22% in 2020, indicating extra energetic buying and selling. He attributed the fluctuations in stock-trading actions to geopolitical components and market sentiment.
“The duty pressure will evaluate exterior and inner components such because the itemizing regime, market construction, and buying and selling mechanism, research easy methods to broaden sources of funding and funding streams, appeal to extra high quality enterprises to drift on the inventory market, innovate funding merchandise, and enhance the turnover fee of shares,” Chan concluded.
