China Cuts Transaction Fees for Share Trading

Chinese regulators, seeking to arrest a 14 percent slide in the nation’s stock market since hitting this year’s high on March 2, lowered transaction fees on the trading of equities by a fifth.
The 20 percent reduction will take effect Sept. 1 and save investors 600 million yuan ($94 million) in transaction-related fees in the final four months of the year, the China Securities Regulatory Commission said on its website today. Separately, the official Xinhua News Agency reported that China was also considering a cut in the stamp duty imposed on share trading.

 

Employees work on the trading floor of the Shanghai Stock Exchange in Shanghai. Photographer: Kevin Lee/Bloomberg

The reduction follows a July 31 announcement by the Communist Party’s Politburo, made up of the nation’s highest ranking officials, that pledged to continue adjusting policies to ensure stable economic growth. China’s benchmark Shanghai Composite Index (SHCOMP) has slumped this year on concern an economic slowdown is deepening and Europe’s debt crisis is worsening.
“The government wants to be seen doing something politically,” Andy Xie, an independent economist who was formerly Morgan Stanley’s chief Asia economist, said today in a telephone interview. “There’s a confidence crisis in the stock market and there’s a perception that the stock market is a trap and doesn’t reward investors.”
Over the past five years, the Shanghai index has been the worst performer among the world’s 10 biggest stock markets with a 52 percent slide, according to data compiled by Bloomberg. The index dropped 0.6 percent today, as about three stocks fell for each one that gained.

Futures Fees

Chinese economic growth moderated in the second quarter to 7.6 percent, the slowest since 2009.
Trading charges will also be cut as much as 26 percent for futures exchanges in Shanghai, Zhengzhou and Dalian, the securities regulator said today. The China Financial Futures Exchange will reduce transaction fees by 28.57 percent, it said.
As a result, futures market costs may be lowered by 1 billion yuan, the CSRC said.
The Shanghai and Shenzhen bourses earlier lowered fees levied for trading A shares by 25 percent on June 1. The regulator also reduced supervision charges on the nation’s stock and futures exchanges this year.
Fees in China’s financial markets have been cut three times this year, which “alleviates market costs and reflects regulator’s confidence and determination to protect the interest of investors and boost the healthy development of the market,” according to the statement.

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