Stamp duty is a cost in securities investors' trades. Theoretically, raising the stamp duty rate will increase the trading costs for Hong Kong stock investors, potentially impacting the trading activity.
According to the proposal to increase stamp duty, the stamp duty rate will be raised from 0.1% of the transaction amount to 0.13%, a increase of 30%.
Currently, the main channel for mainland investors to invest in Hong Kong stocks is through the Stock Connect scheme, which means that the trading costs for mainland investors investing in Hong Kong stocks will also increase.
In recent years, with the listing of mainland xinjingji companies and large internet companies in Hong Kong one after another, attracting the attention of a large number of mainland investors, the number of people granted access to the Hong Kong Stock Connect service has been increasing. The scale of investment in Hong Kong stocks through this channel is also growing. Data shows that the cumulative net purchase amount of southbound Hong Kong Stock Connect has exceeded 2.1 trillion Hong Kong dollars.
In addition, raising the stamp duty rate on Hong Kong stocks will increase the costs for some short-term trading and high-frequency trading investors.
Guangda International pointed out in its research view in March of this year that since 1993, there have been several adjustments to the Hong Kong stamp duty, but the performance of the Hang Seng Index has been mixed, showing that the impact of adjusting the stamp duty on market trends cannot be generalized.
Guangda International stated that raising the stamp duty will indeed have a certain impact on the stock market in the short term. High-frequency trading accounts for about 20% of the Hong Kong stock market. If the stamp duty is increased by 30%, there will be a significant increase in overall transaction costs for many short-term quick programmatic trades, leading to some short-term effects.
Guangda International believes that, in the current environment, with the adjustment and optimization of China's economic structure, China's capital market will be more conducive to the steady growth and sustainable development of the real economy, and the high-quality development of the capital market will also provide more diversified investment opportunities for investors, which is undoubtedly bullish for China's economy.