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On February 24, Hong Kong Special Administrative Region Government Finance Secretary Chen Maobo stated that Hong Kong plans to increase the stamp duty on share transactions to 0.13%. This adjustment represents a 30% increase over the original 0.1%. It is the first time that Hong Kong has increased the stamp duty on inventories in 28 years. Affected by this news, Hong Kong shares fell 914.40 points, or 2.99%, on the same day, and the net outflow of funds from the south was HK $ 20 billion, setting a record for the highest net output ever.
The A-share market has also been implicated by news of the increased stamp duty on Hong Kong stock transactions. On that day, the Shanghai Composite Index plunged 72.28 points, or 1.99%, the biggest one-day drop since 2021 and the biggest one-day drop in the past 7 months.
Has the increased stamp duty on Hong Kong share transactions caused the A share market to drop sharply? Obviously, investors in the A share market have persistent fears about increased stamp duty on share transactions. After all, for some former shareholders, the increased stamp duty on stock transactions has left a shadow in their minds. There is a saying in the stock market called “chicken cries in the middle of the night” that tries to increase the stamp duty on stock transactions. On the night of May 29, 2007 (or early in the morning of May 30), the Ministry of Finance announced that it would increase the stamp tax rate for securities transactions from 1 ‰ to 3 ‰. As of the following day, the Shanghai Stock Exchange index fell vertically from a high of 4335 to 3404 in 5 business days, a drop of more than 20%. Thousands of actions staged a tragedy of continuous falling of limits. Since then, “cooking in the middle of the night” or “raising the stamp tax on stock transactions” has become an eternal pain in the hearts of investors in the A-share market, a scar that can be erased. Therefore, the news that Hong Kong stocks increased the stamp tax on share transactions has also made the hearts of investors in the A-share market a bit sore.
At the same time, the sharp drop in A-shares on February 24 also made investors in the A-share market panic: Will the A-share market continue with the increase in stamp duty on share transactions? in Hong Kong stocks? Without a doubt, this is a doubt in the minds of investors. Originally, Hong Kong shares increased the stamp duty on share transactions, and funds flowed from the south into the A share market. Actually, this is good news for the A share market. Why the A-share market also crashed? Since investors in the A-share market have learned lessons from history, they are more sensitive to this matter.
So will the stock market follow in the footsteps of Hong Kong stocks and increase the stamp duty on stock transactions? The personal answer is no. After all, the A-share market has learned the painful lesson of increasing the stamp tax on share transactions in history, and is bound to remain cautious on the issue of increasing the stamp tax on share transactions. Of course, the reason it is believed that the A-share market will not follow Hong Kong shares to increase the stamp duty on share transactions is mainly based on several reasons.
First, the primary mission of the A-share market is to provide direct financing, not to create taxes. Direct financing here includes OPI financing and refinancing. In order to encourage more companies to go public, the A-share market has undergone registration reforms in recent years. Pilot registration reforms in the Science and Technology Innovation Board and the Growing Business Market have been completed, and the main board is also actively preparing for this. It is also in the context of actively promoting registry system reform that the speed of IPOs has increased substantially. For example, in 2020, a total of 396 companies were successfully included.
It is based precisely on the fact that the main mission of the A-share market is to provide direct financing, so it is not necessary for the A-share market to turn the bandwagon before the horse and repress the A-share market by increasing the tax. stamp on stock transactions. On the contrary, through an active market, more stamp duties can be charged. For example, in 2020, the A-share market is generally active. As a result, the stamp duty on share transactions collected last year reached 177.4 billion yuan, a year-on-year increase of 44.3%, which is equivalent to an increase in the stamp duty rate by 44.3 %. This kind of win-win situation from market conditions and taxes is obviously what management would like to see the most.
Second, the overall quality of current A-share listed companies is not high and cannot offer investors the necessary return on investment. Investors today are investing in the stock market and generally have investment losses. In this case, if the stamp tax on stock transactions is increased, this will only further increase the transaction cost of investors, reduce the investment value of the stock market, and increase the loss of investors. Therefore, this does not favor the protection of investors’ interests. In fact, protecting investors’ interests has become a very important daily job for regulatory authorities, including the new “Securities Law” that also lists “investor protection” as an important chapter to highlight to reflect the investor protection. the importance of. Therefore, in the current market context, it is not necessary to increase the stamp tax on share transactions to increase the transaction cost of investors and increase the burden on investors. This is also an act of “dumping water and raising fish”.
In addition, increasing the stamp tax on share transactions does not favor the improvement of the international competitiveness of the A-share market and neither does it favor the opening of the A-share market. After all, looking at the international market, the low stamp tax or even the abolition of the stamp tax is mainstream. For example, the United States abolished the stamp duty on stock transactions as early as 1966; Germany and Japan also abolished the stamp duty on stock transactions in 1991; Singapore also abolished the stamp duty on stock transactions in 2001. It can be said that reducing transaction costs and reducing the burden on investors has become an important measure for many countries and regions to increase the competitiveness of the market of stocks. values.
In fact, just as Hong Kong was preparing to increase the stamp duty on stock transactions (i.e. on February 24), the US Securities Regulatory Commission announced the reduction of the “stamp tax of class “: as of February 25, 2021, Commission rates (Only sold orders are charged). The loading standard will be reduced from 0.00221% to 0.00051%. Therefore, for the A-share market to persist in opening up to the outside world and improve the international competitiveness of the A-share market, it is necessary to follow the international market in terms of transaction costs and reduce transaction costs as much as possible. , instead of increasing transaction costs.Return to Sohu to see more
Editor:
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