Tuesday, May 29, 2007

China down 6% / China Triples the Tax on Stock Trades

why did it take so long to act seriously......... now the damage is already done......interesiting to see how the markets will follow up tomorrow......one point at the day 200 from 300 stocks of the csi 300 were limit down (10%)!

warum hat das ganze so lange gedauert......nun ist der schaden angerichtet....entscheidend wird sein wie der morgige tag verläuft...im laufe des heutigen handels waren zeitweise 200 der 300 aktien im csi 300 limit down (10%)!

HONG KONG, Wednesday, May 30 — In an abrupt reversal, China’s finance ministry announced early Wednesday morning that it would triple the tax on stock trades, a move aimed at braking what many business executives and economists inside and outside China now see as a stock market bubble.

Just seven days ago, the finance ministry and the State Administration of Taxation took the unusual step of publicly denying that they had any plans to change the tax on stock trading.

>stocks gave risen another 7 percent during this period

>in diesem zeitraum sind die aktien weitere 7% gestiegen

But the finance ministry reversed itself with a statement on its Web site early Wednesday morning noting that increased had been ordered by the State Council, the cabinet of the Chinese government.

By raising the tax, the government now runs the risk of being blamed by the Chinese public if it sets off a stock market rout. A composite index of yuan-denominated A shares traded in Shanghai and Shenzhen plunged 6.3 percent at the opening on Wednesday

Millions of citizens have invested their savings in a stock market that has nearly quadrupled since the start of last year.

The Chinese government has long used changes in the stock trading tax to influence share prices, raising or lowering the tax at least six times in recent years. Investors have watched the level of the tax carefully as an indication of the government’s position.

China started to levy stamp duty in 1990, and initially set the rate at 0.6 percent. This is the eighth time the government has adjusted the rate of the tax.

The last time the government raised the tax was on May 10, 1997, when it was lifted to 0.5 percent from 0.3 percent. The Shanghai Composite Index rose 2.3 percent after the announcement.

``The stamp tax is the latest gesture by the Chinese government to warn investors,'' said Phil Chen, who manages $154 million at Grand Cathay Securities Investment Trust Co. in Taipei.

``The trouble is, Chinese investors probably won't care if a few breadcrumbs are dropped in the transaction as they have such extraordinary returns on their investments

The market had rallied sharply for the last week as investors interpreted last week’s decision to leave the tax unchanged as a sign that the government would let the market set its own course.

The finance ministry is tripling the stamp tax on stock trading to 0.3 percent, from 0.1 percent, effective Wednesday....

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