Chinese Stocks Surge After Trading Tax Cut
bloomberg.com
April 24 (Bloomberg) -- Chinese shares surged after the government cut a tax on equity trading to bolster the world's second worst-performing market this year.
Citic Securities Co., the nation's biggest brokerage, gained on speculation a stock market rally will boost the value of shares held and increase trading income. China Life Insurance Co., the nation's biggest insurer, climbed on optimism gains from equity investments will increase.
The CSI 300 Index, which tracks yuan-denominated A shares listed on China's two exchanges, climbed 314.20, or 9.1 percent, to 3,767.92 as of 10:20 a.m. local time. The gain was the most on record for the three-year-old benchmark. All 10 industry groups on the 300-member measure advanced, with about 80 stocks climbing by the 10 percent daily limit.
``The government is clearly concerned about the meltdown in the A share market,'' said James Liu, Shanghai-based deputy chief investment officer at APS Asset Management, which has a $300 million A-share fund. ``It's positive for the market in the short run.''
The CSI 300 had dropped as much as 39 percent this year on concern earnings growth will slow and new additional share sales will overwhelm demand. The cut on the stock trading tax was the latest move by the government to stem the decline.
The duty was reduced to 0.1 percent from 0.3 percent effective today, the government said in a statement on its Web site after the close of trading yesterday.
``In recent weeks, expectations have been mounting on the government to take decisive steps to prop up the domestic markets,'' Jing Ulrich, Hong Kong-based chairwoman of China equities at JPMorgan Chase & Co., said in an e-mail. ``The lowering of stamp duty is among the most aggressive steps the government could have taken to improve sentiment.''
Citic Securities jumped 2.67 yuan, or 9.1 percent, to 32.13. Haitong Securities Co., the country's second-largest listed brokerage, added 3.55 yuan, or the 10 percent limit, to 39.03.
China Life gained 2.99 yuan, or 10 percent, to 32.87. Ping An Insurance (Group) Co., China's second-biggest insurer, rose 6.07 yuan, or 10 percent, to 66.78. China Pacific Insurance (Group) Co., the third largest, advanced 2.49 yuan, or 10 percent, to 27.35.
In December, China tripled to $30 billion the amount overseas institutions are allowed to invest in yuan-denominated stocks and bonds. Two months later, securities regulators ended a five-month freeze on new mutual funds. The regulator on April 20 required shareholders looking to sell more than 1 percent of a stock to do so in single trades, to keep the transactions off the open market.
The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, soared 8.9 percent to 3,571.03. The Shenzhen Composite Index rose 8.1 percent to 1,038.19. |
