Trading tax hike won’t damage Hong Kong’s stock market place: Money secretary

Hong Kong’s strategy to improve the stamp duty on stock buying and selling will not hurt the competitiveness of the city’s financial markets, Economic Secretary Paul Chan informed CNBC on Friday.

Chan claimed in his funds speech on Wednesday that the governing administration will increase the stamp obligation paid out on stated inventory trades from .1% to .13%. The announcement sparked a offer-off in shares of the operator of the city’s stock trade, and the broader Hong Kong market.   

“The Hong Kong market has been carrying out extremely perfectly, extremely lively, the quantity has gone up quite a little bit,” Chan informed CNBC’s Emily Tan.

“So, perhaps this is the time for us to raise a minor little bit on the stamp obligation which will not hurt our competitiveness and at the identical time will deliver added profits to the governing administration at this juncture,” he additional.

The economic secretary said Hong Kong authorities have in new years launched diverse initiatives to boost the competitiveness of the city’s stock market place. That involves letting listings of dual-class shares and attracting U.S.-detailed Chinese companies to request a secondary listing in Hong Kong, he explained.

Hong Kong in 2020 was one particular of the top rated markets for listings globally as Chinese corporations such as e-commerce giant JD.com and gaming company NetEase lifted funds by means of secondary listings.

In overall, the city’s inventory exchange observed 132 original general public offerings worth $32.1 billion, and 199 even further offerings worthy of $62.9 billion previous 12 months, according to info compiled by consultancy PwC.

With this sort of “robust” capital marketplaces exercise, elevating the investing stamp duty may provide Hong Kong “a swift remedy” to increase its tax revenue in the small phrase, said Stanley Ho, a companion for company tax advisory at consultancy KPMG China.

“Nonetheless, it is also crucial for Hong Kong’s money markets to stay competitive with world money marketplaces, quite a few of which are trending in direction of lowering or eliminating these types of obligations,” Ho mentioned in a statement immediately after Chan’s finances speech.

Chan reported he remains confident of Hong Kong’s potential customers as an international fiscal center.

He defined that the authorities is performing on endorsing Hong Kong as a centre for sustainable and environmentally friendly finance, creating further more the city’s fixed money marketplaces and encouraging more exercise in the asset and prosperity management sectors.

On the inventory market place sell-off after his announcement of the trading tax hike, Chan stated Hong Kong was not the only 1 dealing with a “downward adjustment” subsequent a past run-up.

“So, I would not be bothered by non permanent fluctuations in the market. What we think is we continue to work tricky to enrich the providing of our market to even more improve the competitiveness and attractiveness of the Hong Kong current market,” he claimed.

“We will carry on to bring in inflow of international funds.”