China seeks stock market boost with tax cut

SHANGHAI : China's securities regulator on Friday said it would cut tax on dividends from longer-term stock investments from January, in a bid to curb speculation and boost the flagging market.

The China Securities Regulatory Commission said investors who hold stocks for more than one year would be taxed at five per cent on dividends they earn, half the rate that now applies across the board.

But investors who hold their shares for less than a month will be taxed at 20 per cent and those who have them for one month to a year will still pay the 10 per cent rate, the securities regulator said in a statement.

"This will encourage long-term investment and curb short-term speculation in a bid to foster long-term and healthy development of the domestic capital markets," it said.

The announcement came as the Shanghai stock market, one of China's two, closed at a seven-week low on Friday as investors wait for a policy boost amid the weak domestic economy, dealers said.

Analysts called the announcement positive for the market but said it might not arrest the slide.

"It is certainly favourable news, but whether the index can stabilise will also depend on other factors including the global economy and liquidity conditions," Zheshang Securities analyst Zhang Yanbing told AFP.

China's stock market has fallen more than eight per cent this year as the world's second-largest economy lost steam, recording 7.4 per cent growth for the third quarter, its lowest rate in more than three years.

The securities regulator took a series of measures in recent months to appease investors, including cutting brokerage fees and allowing more foreign funds into the market.

Source: http://www.channelnewsasia.com