Tue, Apr 14, 2015 - Page 13 News List

Stock transaction tax affected market turnover: FSC boss

LACKLUSTER:Taiwan’s higher tax rate of 0.3% compared with its peers means higher costs for investors, capping market growth, the regulator said

By Amy Su  /  Staff reporter

Financial Supervisory Commission (FSC) Chairman William Tseng (曾銘宗) yesterday attributed sluggish turnover in the local stock market to a relatively high securities transaction tax.

Tseng made the comments during a question-and-answer session at the Legislative Yuan, as lawmakers expressed concern over lackluster trading in the local stock market, while its Hong Kong counterpart surged to a seven-year high.

Asked if the Shanghai-Hong Kong Stock Connect led to a net outflow of global funds and affected local trading volumes, Tseng said the impact was limited, as daily turnover on the nation’s sub-brokerage business for Hong Kong’s equity market only amounts to about NT$200 million to NT$300 million (US$6.38 million to US$9.57 million).

The commission forecast that the Taiwan Stock Exchange’s average daily turnover this year would range between NT$120 billion and NT$130 billion.

Daily turnover reached NT$115 billion in January and NT$105 billion in February, according to the commission’s data.

“I am definitely not satisfied with the trading figures,” Tseng told legislators.

Taiwan’s securities stock transaction tax of 0.3 percent is relatively high compared with neighboring markets, driving up costs for stock investors and capping the growth of the local equity market, Tseng said

Investors are taxed 0.2 percent and 0.3 percent on stock trading in Hong Kong and Singapore respectively, Tseng said.

The fundamentals of the nation’s securities market remain good, Tseng said, citing good cash dividend yields.

Stocks are not expensive, with a market price-to-earnings ratio of 15.72, he said.

With net inflow by foreign portfolio investors reaching US$199.6 billion as of Wednesday last week, Tseng said he was confident that these funds would find their way into the equity market at some point.

The TAIEX yesterday rose 0.51 percent to 9,666.52, but turnover shrank to NT$82.546 billion from NT$92.67 billion on Friday.

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