THE 25 per cent reduction in stamp duty on stockmarket share transactions is a step in the right direction, but it does not go far enough.
The reduction takes the duty on a round trip to 0.3 per cent, a cut of 0.1 of a percentage point from pre-Budget days and 0.2 per cent from two years ago.
At a sloth-slow pace, the government authorities, through the office of the Financial Secretary, will inevitably get around to abolishing this iniquitous tax, but not before time.
Last year the market had a record turnover of $700 billion, almost double the previous record in 1987.
Yet, according to data from the Securities and Futures Commission (SFC), this figure could have been at least $70 billion more, and possibly $175 billion, had there been no turnover leakage in blue chips share trading to New York and London.
In the case of Hongkong Telecom, the exodus of turnover is not leakage but voluminous haemorrhaging. In less than three years we have arrived at the point where more shares in the territory's prime telecommunications supplier are traded in New York overnight, Hongkong time, than through the local exchange on a daily basis.
Other blue chips see around 20 per cent to 30 per cent of their turnover in London trading hours. This is due to accelerate when London launches Taurus, a comprehensive, auto-trading system. Institutional investors will find it easier to use going through Hongkong.
