Hong Kong’s tax increase in stock trading has been a “convenient catalyst” that has helped drive a healthy correction for the city’s markets, says Gold Mo Sachs’ Tim Moe.
The government announced on Wednesday in its budget that the stamp duty for share transfers will be increased to 0.13% from 0.1%.
The move sparked a sharp sell-off in broader markets on Wednesday, but stock prices partially returned on Thursday.
The Hang Seng index rose 1.2% on Thursday, after falling about 3% the day before.
Meanwhile, Hong Kong stock markets and offsets posted additional losses and fell 1.77% on Thursday, after falling from more than 8% the day before. HKEX operates the city’s stock exchange and on Wednesday saw a 20% year-over-year increase in its 2020 shareholder profit.
“I think it’s important to mention that overall growth, that is, yes, sounds like a high 30%, but it’s really 3 cents per hundred dollars of trading – this won’t be the only or sufficient fundamental reason for people to take a investment decision, “said Moe, co-head of Asian macro-research and chief Asia-Pacific capital strategist at the US investment bank.
Our opinion is that raising the stamp duty has been a kind of convenient catalyst for a market that has done very, very well.
Timothy Moe
Asia-Pacific Chief Strategist, Goldman Sachs
“Our opinion is that the increase in the stamp duty was a kind of convenient catalyst for a market that did very, very well. It’s probably a little over its skis in terms of positioning, valuation and we had what you might call a correction. healthy, “he told CNBC’s Squawk Box Asia on Thursday.
Despite Wednesday’s sharp losses, the Hang Seng index is still up 9% higher for the year since its close on Wednesday.
In January, Moe told CNBC that mainland Chinese investors made a significant contribution to Hong Kong’s “very strong start” in 2021.
Looking ahead, strategist Goldman Sachs said Hong Kong markets are likely to continue their upward path as this period of sales falls.
“What we would look at as a healthy clean-up of oversized positions, some of the preferred shares held strongly sold,” Moe said. “We believe that once we go through this kind of clear positioning, that the market … can continue to make upward gains this year.”
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