China halves stock trade stamp duty in bid to revive slumping market

China halved the stamp tax on stock trading on Monday, thelatest move to bolster the faltering share market amid a slowdown in economic recovery.

In a short statement on Sunday, the finance ministry said it was lowering the 0.1 percentlevy on stock trades "to energise the capital market and boost investor confidence".

Reuters quotedXie Chen, a fund manager at Shanghai Jianwen Investment Management Co, as saying,"Such a policy will likely provide a short-term boost to the market but will have little long-term impact. The rebound could last only two to three days, or even less."

Along with the action by the finance ministry, the China Securities Regulatory Commission (CSRC) is implementing steps to boost market confidence in investing in publicly traded businesses.

The CSRC announced on Sunday that China will restrict the pace of initial public offerings (IPOs) and strictly control share reductions by significant owners. Meanwhile, the CSRC has reduced margin funding requirements in Chinese stock exchanges.

Late last month, China's authorities pledged to re-energize the world's second-largest stock market, which has been flailing as the post-pandemic recovery falters and a debt problem in the housing sector worsens.

Furthermore, Beijing has implemented a number of policies, including a smaller-than-expected reduction in a key lending benchmark last week. However, investors are calling for a more aggressive policy response, including huge government investment.

In the latest indicator of economic weakness, statistics released on Sunday revealed that earnings at China's industrial enterprises fell for the seventh month in a row, with poor demand pinching businesses.

Under the direction of the State Council, regulators, including the Ministry of Finance, submitted a draft proposal for a stamp duty reduction to the cabinet this month, according to sources familiar with the subject.

(Inputs from Reuters)

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