Tax on share sales may be further reduced
Daniel Ren in Shanghai and Eric Ng in Beijing
The mainland's top securities regulator says Beijing could further cut the stamp duty on share sales, the latest sign the government is helping to support the volatile equity market after a 21.98 per cent gain this year.
Shang Fulin, the chairman of the China Securities Regulatory Commission, also said yesterday he was confident of the fundamentals of the mainland economy and its listed companies.
Speaking on the sidelines of the National People's Congress annual session, Mr Shang (right) was echoing remarks made by parliamentary spokesman Li Zhaoxing on Wednesday that Beijing would further cut stock trading tax.
It is the Ministry of Finance, not the CSRC, that has the power to decide stamp duty.
Beijing reduced the stamp duty on buying and selling stocks to 0.1 per cent from 0.3 per cent in April last year to underpin the falling market. In September, the government scrapped the tax to encourage buying amid a crisis of confidence on the equity market.
'Stamp duty is not the major factor that can affect market sentiment,' said China Jianyin Investment Securities analyst Yang Zongyao. 'But it looks like the upward momentum remains, at least for the short run.'
The Shanghai Composite Index added 22.969 points or 1.04 per cent to close at 2,221.076 yesterday, after it climbed as much as 1.99 per cent in the morning session. The key gauge jumped 6.12 per cent on Wednesday amid investor expectations of a fresh stimulus package to be unveiled by Premier Wen Jiabao in his annual work report to the National People's Congress meeting yesterday.
Mr Shang said the CSRC was still considering reforming the mainland's initial public offering system and whether to resume the vetting of listing applications after nearly a six-month suspension. Beijing stopped approving offerings in September last year to prevent an influx of new stocks amid the market's tumble.
Although Mr Shang did not disclose the timetable for the resumption, analysts predicted new share sales would be allowed when the key index rises above 2,500 points.
Sources said the CSRC was likely to give retail investors a bigger say in pricing new offerings and require underwriters to bring prices to attractive levels.
Mr Shang said the reform aimed to ensure fairness.