Stocks fees reduced 'to lift competitiveness'
Stamp duty on stock transactions will be cut for the first time in five years.
Mr Tsang proposed to reduce the duty from 0.3 per cent to 0.25 per cent in an effort to increase the market's competitiveness.
He also suggested regional derivative options and convertible bonds be exempt from stamp duty. This exemption would also cover transactions in regional derivative warrants holding less than 40 per cent Hong Kong stock.
The total cost of the concessions will be $950 million in 1998-99 and $4.6 billion up to 2001-02. In 1993, stamp duty was cut from 0.4 per cent to 0.3 per cent.
The Government had insisted that stockbrokers cut their commission before a further stamp duty cut.
The Securities and Futures Commission and Stock Exchange plan to lower transaction levies from 0.013 per cent to 0.011 per cent for each stock transaction from April 1. While Mr Tsang said that he appreciated the difficulties stockbrokers were facing, he appealed to them to consider cutting their 0.25 per cent minimum brokerage charges.
'I now appeal to the industry to come forward with their own cost-reduction initiatives as soon as possible,' he said.
The Stock Exchange wants the Government to abolish stamp duty because it is a main component of transaction costs.
Stockbrokers Association chairman Dannis Lee Jor-hung welcomed the cut, but said it would be difficult for brokers to cut commissions when turnover had dropped significantly.
Mr Tsang also proposed to reduce the capital duty on stock transactions from 0.3 per cent to 0.1 per cent, with a ceiling of $30,000 for each case.
The move would benefit company mergers and restructuring involving large share issues.
The concessions would cost $500 million in 1998-99 and $2.4 billion up to 2001-02, he said.
