Event:
Approved by State Department on Sep 18, Ministry of Finance and State Administration of Taxation decided to adjust bilateral stamp duty to unilateral with tax rate 0.1% unchanged from Sep 19 onwards. Meantime, National Assets Committee and China SAFE Investments Limited announced to uphold increasing and buy-back of shares from listed companies.
Our analysis and estimation:
Government’s movement spelt strong signal for the management to boost up confidence and support the stock market. It will help ease panicking of investors. In the past, adjustment of stamp duty produced unsteady impact on market trend and trading activities.
To sum up, stamp tax adjustment helps to promote market trading activities so as to stabilize the market and rebound. However, if macro-economy and profitability of companies do not recover, impact of the policy will be not constant.
Earnings forecast and rating:
Trading opportunities may exist in securities industry under political motivation; maintain “Neutral” rating for the counter.