China has decided to cut the stamp duty on stock market transactions to 0.1 percent from 0.3 percent beginning today, state media said, following deep plunges in share prices.
The measure was approved by the State Council, Xinhua news agency reported late yesterday.
The development comes with the stock market languishing around 46 percent below an all-time high reached last October. The key Shanghai Composite Index recently flirted with the psychologically important 3,000-point level.
It is the second major step to boost share prices announced by Chinese authorities this week, signaling concern about the fate of the stock market, where millions of Chinese have invested some of their savings.
On Sunday, authorities issued new rules placing curbs on the sale of non-tradable shares coming out of lock-up periods.
The move addressed concerns about a flood of stock coming into the market quickly and sending prices lower.
China last adjusted the stamp duty tax last May, when it hiked it from 0.1 percent to 0.3 percent.
The Chinese stock market at the time was experiencing the fiercest bull run in its history, but reacted by plunging 6.5 percent — reflecting how important changes to the stamp tax can be for investor psychology.
Yesterday the Shanghai Composite Index, which covers A and B shares, closed up 130.54 points or 4.15 percent at 3,278.33 on turnover of 86.1 billion yuan (US$12.3 billion).
Dealers said investors were buying oversold stocks as the belief grew that a slump in earlier sessions had gone too far.
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