Chinese government cuts stock exchange tax to support stock markets. Major shareholders and unprofitable companies are restricted from sales and refinancing.

Chinese government cuts stock exchange tax to support stock markets. Major shareholders and unprofitable companies are restricted from sales and refinancing.

According to a report in the Süddeutsche Zeitung, the Chinese government has taken further measures to stabilize the weak stock markets. The Chinese Ministry of Finance announced that the stock exchange sales tax on stock transactions will be reduced. In addition, the Chinese stock market regulators have announced that they will restrict the sale of shares by major shareholders and limit the refinancing options of unprofitable companies. Furthermore, the government will be more cautious when it comes to IPOs. Investors reacted positively to the package of measures.

These measures by the Chinese government may have an impact on the market and financial industry. Reducing the stock exchange sales tax on stock transactions can make stock trading more attractive and attract new investments. Restricting stock sales by large shareholders can increase the stability of the stock market because large sales can significantly affect the price. Restricting the refinancing options of unprofitable companies can help clean up the market and lead to a healthier economy. A more cautious approach to IPOs can reduce the risk of overvaluation and market bubbles.

The Chinese economy is currently struggling with the consequences of the corona pandemic and a serious crisis in the real estate sector. The measures to support stock markets are part of a broader plan by the Chinese government to stimulate the economy and restore financial stability.

According to the article, shares in real estate group Evergrande fell 87 percent at the start of trading in Hong Kong. Evergrande had already recorded payment defaults in the past, which led to turbulence in the Chinese real estate market. State news agency Xinhua recently reported that the Chinese government wants to introduce relaxed credit conditions to curb the housing crisis.

The Chinese government's actions have resulted in a short-term increase in the CSI 300 by over 5 percent. The CSI 300 index tracks the share prices of the largest companies on the Shanghai and Shenzhen stock exchanges. The Hang Seng Index in Hong Kong rose 1.7 percent.

The agreed reduction in stamp duty on traded shares from 0.1 percent to 0.05 percent will particularly benefit brokers and hedge funds that rely on quick trading turnover. The restrictions on share sales by major shareholders apply under certain conditions, such as low dividend payments or a decline in share value. Companies experiencing persistent losses may also find their refinancing options limited.

Overall, the Chinese government's measures are expected to help improve stock market stability and protect the financial industry from possible crises. However, it remains to be seen how the economy and real estate sector in China will develop and how the stock markets will develop in the long term.

Source: According to a report by www.sueddeutsche.de