Brokerage shares rally as CSRC lowers fees
Shares of mainland brokerages rallied yesterday as Beijing moved to lower trading fees in a bid to revive the moribund stock market.
Analysts say that could lead to the injection of more investment funds.
The A-shares of Citic Securities rose 1.31 per cent to 13.17 yuan (HK$16.20) in their biggest intra-day increase since April 20, while the firm's H shares climbed 1.96 per cent to HK$16.82.
Likewise, Haitong Securities' A-shares increased 2.33 per cent to 10.12 yuan, while their H-shares surged 6.26 per cent to HK$11.54 - their biggest rally since their Hong Kong market debut on April 27.
Yesterday the China Securities Regulatory Commission (CSRC) said from June 1 the Shanghai and Shenzhen bourses and the clearing house would cut brokerages' trading fees by 25 per cent, a likely annual saving of 3 billion yuan for the brokers.
In Shanghai, brokerages will pay 0.0087 per cent of the transaction value, down from 0.011 per cent currently. Transaction fees are levied on the buying and selling of shares.
Over in Shenzhen, trading fees will also fall to 0.0087 per cent, from the present 0.0122 per cent.
The clearing house will levy a rate of 0.0375 per cent per trade, down from the present 0.05 per cent.
'Brokerages will directly benefit from the cut but investors will be able to ask for lower brokerage fees later on, lowering their trading costs,' said Zhang Qi, a Haitong Securities analyst.
'The regulator's ultimate goal is to encourage equity investments by lowering investors' trading costs.'
Brokerages' transaction fee payments to the exchanges and the clearing house are included in the commissions they charge their clients, most of whom are retail investors. Also, investors have to pay stamp duty to trade.
Since taking office in October, CSRC chairman Guo Shuqing has been seeking to enact reforms to safeguard investors' interests following the market sell-offs in 2010 and last year, when the Shanghai market was among the world's worst performers.
Guo had urged retail investors to focus on stable blue-chip stocks rather than market rumours.
The average percentage that trading fees in futures trading will fall by, according to the CSRC