Shanghai up 10% as China cuts stamp duty on stks

By CNBC-TV18's research analyst, Varinder Bansal

Today Shanghai Composite Index was up more than 10% as Chinese authorities has cut tax on trading on stocks from 0.3% to 0.1%. The stamp tax has come back to its level of last May, when the government raised it to cool the stock market.

Shanghai Index had plunged 51% from all time high of 6,092 in October to low of 2,990.8 on April 22. China lost nearly USD 2.4 trillion in market-cap since the peak.

Small players will get affected than big institutions due to this tax cut. The cost of a USD 1,000 trade will fall by only USD 2 for each buyer and seller in every transaction.

This move came after Chinese market retraced around 50% from its all-time high and lost 12% last week. There is plethora of initial public offerings of small companies lined up.

May 2007

• Retail-investor accounts topped 100 m for the 1st time in last May
• Household deposit levels were recording their most noticeable falls in years