China’s stock indexes see-saw as miscued comments over stamp duty cut sends legions of day traders into short-lived frenzy

China’s proposed move to lower stamp duty has been misinterpreted by some investors that it could lead to a cut in trading costs, despite there being no such mention, analysts said.

At a press conference on Friday, Zang Tiewei, a spokesman for the National People’s Congress Standing Committee, the nation’s top legislative body, said that there were plans to amend the draft deliberations on laws related to stamp duty, such as lowering the rate and defining the scope of the levy. While Zang’s comment did not mention stock trading, some investors read it as a cut in stock trading costs, fuelling gains in the shares of publicly traded brokerages as they would benefit most from increasing transaction volume as a result of the proposed cut.

The gains were short lived, after securities analysts including those from Huaxi Securities pointed out that the comments had been interpreted incorrectly, because market authorities tend to cut trading costs when sentiment is poor to boost the market.

The CSI300 index, which tracks the 300 largest stocks in both Shanghai and Shenzhen, jumped by as much as 1.5 per cent to an intraday high before giving away most of the day’s gains to close the day 0.5 per cent higher. Benchmark gauges in both markets surged before ending lower.

The amendment on the draft law on the stamp duty does not involve stock trading, said the Securities Times, a newspaper run by the Communist Party’s mouthpiece People’s Daily, citing unidentified government sources.