(Bloomberg) – China cut stamp duty on stock deals for the first time since 2008 and vowed to slow the pace of IPOs, alongside a raft of new measures to lure investors back into its flagging stock market.
Most Read by Bloomberg
The levy levied on stock transactions will fall from 0.1% to 0.05% from Aug. 28, the Treasury said in a statement Sunday, to “revive capital markets and boost investor confidence.”
China’s securities regulator cited “current market conditions” as the rationale for slowing the pace of IPOs, without specifying how it would achieve this. The CSRC also said it would place limits on the frequency and size of refinancing for companies that consistently report financial losses and whose stock prices have fallen below IPO levels or net asset levels. Builders are exempt from the rule, it said.
Authorities have tried to allay worries about the economy sparked by a sluggish housing market, defaulting trustees and weak consumer spending. Overseas investors net sold mainland China stocks for 13 consecutive sessions through Wednesday, the longest stretch on record, data compiled by Bloomberg showed.
The CSI 300 index is down about 4% in 2023 after consecutive annual losses, underperforming a broader index of Asian equities by about 6 percentage points. Authorities this month urged pension funds, big banks and other major domestic financial institutions to increase equity investments to prop up the market.
Regulators have also lowered stock transaction processing fees, urged mutual fund managers to increase buying of their own stock funds, and encouraged companies to do more share buybacks.
The story goes on
China last cut stamp duty to 0.1% in April 2008 to prop up the market after a slump that sparked an upward trend the following year. The year before, in May 2007, it raised interest rates to 0.3% to cushion a rally that was attracting more than 300,000 new investors daily.
Other highlights of the measures announced by CSRC on Sunday:
-
The margin ratio for margin trading will be reduced from 100% to 80% as of market close on September 8th
-
For companies whose stock prices have fallen below the IPO level or the net asset level, or that have not paid any cash dividends, or whose total cash dividend is less than 30% of the average net income for the past three years, the majority shareholders and de facto controlling holders are allowed to sell their holdings on the secondary market not reduce
(added more details)
Most Read by Bloomberg Businessweek
©2023 Bloomberg LP
Comments are closed.