They charge 3% tax per trade! Damn, those Chinese stocks must be really rocketing to withstand that! And I also hear that Mickey D's everything you can buy for $1 now costs $30.
Typical behavior of the last stage of the bull market. Chinese investors are pretty crazy now, no one belives the market will fall.
China Stocks Fall From Record After Transaction Tax Tripled By Zhang Shidong and Alexander Ragir May 30 (Bloomberg) -- China's stocks dropped from a record after the government tripled the tax on securities transactions, halting a rally that's made the shares Asia's most expensive. The CSI 300 Index fell 110.61, or 2.7 percent, to 4057.68 as of 10:30 a.m. in Shanghai, after initially tumbling as much as 6.3 percent. The measure has almost doubled this year, the best performance of 90 global benchmarks tracked by Bloomberg, as an influx of new investors stoked demand. China's brokerage accounts this week topped 100 million for the first time, according to the China Securities Depository & Clearing Corp. Stamp duty on share trades has been increased to 0.3 percent, effective today, ``to promote the healthy development of the securities market,'' the finance ministry said on its Web site. The central bank this month raised interest rates for the second time this year, encouraging people to save rather than invest in stocks, and brokerages were ordered to make investors sign a declaration acknowledging risks when opening accounts. ``The government is doing something real to curb speculation and prevent the market from overheating,'' said Li Xuewen, who manages about $284 million at Invesco Great Wall Fund Management Co. in Shenzhen. ``If the market doesn't cool down, more measures to stem the gains will probably follow.'' Based on yesterday's closing price of 64 yuan, investors now have to pay 192 yuan ($25.1) in tax when buying or selling 1,000 share of Citic Securities Co., up from 64 yuan before the increase. Citic Securities, the nation's biggest publicly traded brokerage, has the biggest representation in the CSI 300. A record 455,111 accounts to trade mainland shares and mutual funds were opened on May 28, China Securities Depository & Clearing said yesterday. More than 20 million accounts have been opened at brokerages so far this year, four times the amount in all of 2006, according to the clearing house. Expensive The surge in new investors has made Chinese shares the most expensive in the Asia-Pacific region, with the CSI 300 Index trading at 48 times earnings, according to Bloomberg data. The CSI 300 Index tripled in the past year, prompting central bank officials, former U.S. Federal Reserve Chairman Alan Greenspan and Li Ka-shing, Asia's richest man, to warn of the market's imminent collapse. The index, which tracks yuan- denominated A shares, yesterday rallied to all-time high, its 11th record this month. Within the region, Taiwan levies a 0.3 percent tax only on share sales, while Japan, Australia and Thailand don't tax transactions at all. 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. `Few Breadcrumbs' ``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.'' China has been trying to curb speculation in the market for months. A government crackdown on investments with borrowed money on Feb. 27 sent the CSI 300 Index down 9.2 percent, the biggest one-day rout in 10 years. That slump triggered a global sell-off that wiped out more than $3.2 trillion of stock market value. The CSI 300 recouped all its losses within a month. ``Investors are concerned that there may be more macroeconomic measures to come to slow down the Chinese economy,`` said Romeo Dator, a portfolio manager at San Antonio- based U.S. Global Investors Inc., which has about $4 billion under management. To contact the reporters on this story: Zhang Shidong in Shanghai at at szhang5@bloomberg.net ; Alexander Ragir in New York at aragir@bloomberg.net . Last Updated: May 29, 2007 22:31 EDT http://www.bloomberg.com/apps/news?pid=20601087&sid=aFvX7W9LaMNw&refer=home
dude. thats kind of funny. i sold some FXI puts today when it was near its low. (please refrain from the normal ET diatribe of : "you are stupid. etc")
^SSEC Shanghai Composite 4,071.27 May 29 Down 263.66 (6.08%) quick 10% correction then a quick run to 5000. Everyone tomorrow will call this a buying opportunity.
Not 3%, 0.3%. These guys are buying and holding, whats the big deal aboyt a measley 0.2% increase in transaction cost? People are probably more worried that there is more to come from the government than the tiny increase in stamp duty. I agree back to new highs end of the week or early next.
its down about 6% to 4071, I think this is just a dip that will create the next chance of a buying opportunity that will bring it to 5000+ by the end of June without a problem. Tomorrow it will gain back 3/4 of what it lost tonight and by early next week be back at new highs like this 6% drop never happened.
Fell again: Index Value: 4,000.74 Trade Time: 3:00AM ET Change: Down 108.91 (2.65%) Prev Close: 4,109.654 Open: 4,120.628 Day's Range: 3966.98 - 4181.28 52wk Range: 1,528.23 - 4,335.96