Chinese authorities have introduced new measures to boost investor confidence in the stock market by reducing trading costs, relaxing rules on share buybacks, and considering extended trading hours and a cut in stamp duty, following recent declines in both the stock and bond markets. These declines have been influenced by China's deteriorating economic outlook, including deflation, weak consumer spending on manufactured goods, rising youth unemployment, and concerns over the property market.
Chinese authorities are planning to cut the stamp duty on domestic stock trading by as much as 50% in an effort to revive the struggling stock market and boost investor confidence.
Hong Kong Chief Executive John Lee has established a task force to study the possibility of reducing stamp duty on stocks in order to strengthen the local economy, as the move comes after China halved its stock stamp duty in an effort to boost investor confidence.
China's stamp duty and margin cuts revive confidence in the Hong Kong stock market, leading to a rally in stocks such as HKEX, Alibaba, and BYD, while China Evergrande continues to struggle.
China has announced measures to support the market, including reducing stamp duty on stock trading and approving the launch of retail funds, but the response from investors has been muted.
Hong Kong brokers and analysts are calling for a reduction in stamp duty and relaxed listing rules to revive the sluggish stock market, following a decline in turnover after the government increased the stamp duty in August 2021; they suggest that these measures would attract more investors and new listings.
Nomura Holdings believes that China's recent market-boosting measures, including a cut in stamp duty, will not be enough to sustain a rebound in stocks or bolster economic growth without additional policy support for the real economy.
Hong Kong has established a 13-member task force to review the stock market's liquidity and improve its competitiveness, including examining the listing regime, market structure, and trading mechanism; however, there was no announcement regarding a reduction in stamp duty on stock trading.
China's government implemented various measures to boost its stock market, including a cut in stamp duty and restrictions on selling shares, but the impact has been limited as the CDI 300 index closed up just 1.2% after initially opening higher, and troubled property developer Evergrande experienced an 87% drop in stock value; foreign investors are pulling their money out of China and want to see more significant policy measures from the government.
Apple's recent stock decline due to Chinese government restrictions on iPhones and foreign-branded devices represents a buying opportunity, as China's past restrictions have not significantly impacted sales and Apple's attractive valuation and strong prospects suggest a rebound.
