Chinese authorities have decided to pull out of a tax increase on stock transactions. This move follows reports showing that the Chinese market is down nearly half since its peak back in October of last year. Since that time, the Shanghai SE Composite Index is down 45% – from around 6000 to a paltry 3100. The measure has already proven to be a great help in stimulating trade, as the Shanghai Composite Index went up 4.2% after the announcement.
This effort to boost the equities market reduces the tax on trading to 0.1% of the value of each purchase or sale of stock. While the market in China has been having its downs lately, the government has remained stoic and silent; relying instead upon the recent policy changes to bring the market back to a healthier state. Instead of the usually heavy-handed treatment of markets seen in past years, Beijing is loosening up with hopes of stimulating it.
The trading tax was originally 0.3%, and was raised about a year ago when China tried to stem the tide of overt stock speculation which had been taking place in the market. After the announcement was made, the Index made a leap of 130 points to close at 3278.33 on Wednesday, and closed yesterday at a healthier 3557.75.
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