China is slashing the trading cost for stock investors as the stamp tax on stock trading was cut to 0.1 percent from the current 0.3 percent starting from Thursday.
The new measure, announced Xinhua news agency, comes after the country’s stock market has fallen nearly 50 percent from its peak since mid-October, tight monetary policies, and concerns over the economy and corporate earnings due to a global economic slowdown.
The benchmark Shanghai Composite Index (SCI) tumbled more than four percent on Tuesday to fall below 3,000 points, the lowest level in 13 months, before rallying to positive territory. The gauge jumped 4.15 percent on Wednesday.
At an executive meeting of the State Council chaired by Premier Wen Jiabao on Tuesday, decision makers decided to push forward the healthy development of the country’s capital market, according to the CCTV.
This is the second major step to boost share prices announced by the Chinese authorities this week, signaling concern about the fate of the stock market, where millions of Chinese have invested some of their savings.
The tax move came 11 months after the trading cost was tripled to 0.3 percent to take the steam out of a spectacular bull run that saw the SCI more than quadrupled in less than two years.
This latest move was meant mainly as a signal to investors that their plight was not being ignored.