Hong Kong stocks close at 10-year high; HKEX rallies on reported stamp duty cut

However, HKEX chief executive Charles Li said he was not aware of any specific plan, programme or decision to review or reduce stamp duty

PUBLISHED : Monday, 16 October, 2017, 10:48am
UPDATED : Monday, 16 October, 2017, 9:54pm

Hong Kong stocks reached their highest level in nearly a decade on Monday after media reports said the bourse operator was considering asking the city’s government to cut the stamp duty on share trades.

The Hang Seng Index rose 0.8 per cent, or 216.37 points, to 28,692.80, the highest level since December 2007. Turnover was HK$103 billion compared with average daily trading turnover of HK$95 billion in the previous week.

The Hang Seng China Enterprises Index, known as the H-shares index, gained 0.7 per cent to 11,602.92.

Hong Kong Exchanges & Clearing (HKEX) rose as much as 4.8 per cent before paring increases to end the day 2.7 per cent higher at HK$225.6.

HKEX chief executive Charles Li Xiaojia said he was not aware of any specific plan, programme or decision to review or reduce stamp duty. Bloomberg had earlier reported that the bourse operator was considering asking the city’s government to remove or reduce the 0.1 per cent stamp duty on stock trades, a move that many see as boosting stock trading and market liquidity.

A spokesperson for HKEX said stamp duty on stock transactions is a matter of government fiscal policy and any change would not be a decision for HKEX to make.

Hong Kong stocks reach near 10-year high led by financials, autos despite sell-off in Macau casinos

“We regularly discuss with our regulator and the government matters of policy affecting the Hong Kong market. However, we won’t comment on news reports and market speculation,” the spokesperson said.

Citi Group maintained its Buy rating for HKEX in its latest research report, and an ambitious target price of HK$280. Citi said the chance may be low for a cut in stamp duty to occur in the near term. Nonetheless, if the trading tax is reduced, it will reduce stock transaction costs and increase trading turnover, Citi said.

Financials also saw solid gains on Monday, with China Construction Bank up 1.1 per cent to HK$7.04 and Ping An rising 1.2 per cent to HK$64.7.

Nanfang Communication Holdings, an optic fibre cable manufacturer, added 0.5 per cent to HK$4.2 after the resumption of trading.

Panda Green Energy Group surged 6.2 per cent to HK$1.2 after it said its 47 power plants and joint ventures generated around 555,300 megawatts-hour (MWh) of electricity in the third quarter, up 42.92 per cent from the same period last year.

Among other market movers, Geely Auto pulled back after recent gains, down 1.3 per cent to HK$26.6, the biggest underperformer among Hang Seng Index components.

Great Wall Motor slipped 2.7 per cent to HK$11 after the resumption of trade. China International Capital Corp maintained a hold investment rating on the car company due to the high uncertainty over its potential cooperation with BMW’s Mini brand.

Mainland Chinese markets dropped with the approach of China’s once-every-five-year party congress later this week, when some 2,300 delegates, including senior party members, are expected to meet in Beijing and elect President Xi Jinping for his second five-year term as party chief.

The Shanghai Composite Index eased 0.4 per cent to 3,378.47. The large-cap CSI300 edged down 0.2 per cent to 3,913.45.

The Shenzhen Composite Index and the start-up board index ChiNext fell 1.5 per cent and 2.3 per cent to trade at 2,005.95 and 1,882.69 respectively.