Trading tax hike won’t harm competitiveness of Hong Kong’s stock market, says financial secretary

Hong Kong’s plan to extend the stamp responsibility on stock buying and selling won’t harm the competitiveness of the town’s financial markets, Financial Secretary Paul Chan instructed CNBC on Friday.

Chan said in his budget speech on Wednesday that the federal government will increase the stamp responsibility paid on listed stock trades from 0.1% to 0.13%. The announcement sparked a sell-off in shares of the operator of the town’s stock change, and the broader Hong Kong market.   

“The Hong Kong market has been doing very well, very active, the volume has gone up quite a bit,” Chan instructed CNBC’s Emily Tan.

“So, perhaps this is the time for us to increase a little bit on the stamp duty which will not harm our competitiveness and at the same time will bring additional revenue to the government at this juncture,” he added.

The financial secretary mentioned Hong Kong authorities have lately launched totally different initiatives to boost the competitiveness of the town’s stock market. That consists of permitting listings of dual-class shares and attracting U.S.-listed Chinese firms to hunt a secondary itemizing in Hong Kong, he mentioned.

Hong Kong in 2020 was one of the highest markets for listings globally as Chinese companies similar to e-commerce large JD.com and gaming firm NetEase raised funds via secondary listings.

In complete, the town’s stock change noticed 132 preliminary public choices price $32.1 billion, and 199 additional choices price $62.9 billion final yr, in response to knowledge compiled by consultancy PwC.

With such “robust” capital markets exercise, elevating the buying and selling stamp responsibility could provide Hong Kong “a quick solution” to extend its tax income within the brief time period, mentioned Stanley Ho, a accomplice for company tax advisory at consultancy KPMG China.

“However, it is also important for Hong Kong’s capital markets to stay competitive with global financial markets, many of which are trending towards reducing or removing such duties,” Ho mentioned in a press release after Chan’s price range speech.

Chan mentioned he stays assured of Hong Kong’s prospects as a world financial heart.

He defined that the federal government is engaged on selling Hong Kong as a middle for sustainable and inexperienced finance, creating additional the town’s fastened revenue markets and inspiring extra exercise within the asset and wealth administration sectors.

On the stock market sell-off after his announcement of the buying and selling tax hike, Chan mentioned Hong Kong wasn’t the one one experiencing a “downward adjustment” following a earlier run-up.

“So, I would not be bothered by temporary fluctuations in the market. What we believe is we continue to work hard to enhance the offering of our market to further enhance the competitiveness and attractiveness of the Hong Kong market,” he mentioned.

“We will continue to attract inflow of international capital.”