Signaling for Hong Kong Exchanges & Clearing Ltd. (HKEx) in Hong Kong
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Hong Kong’s plan to increase the stamp duty when trading shares will not affect the competitiveness of the city’s financial markets, Finance Secretary Paul Chan told CNBC on Friday.
Chan said in his budget speech on Wednesday that the government will raise the stamp duty paid on share-traded transactions from 0.1% to 0.13%. The announcement triggered a stock sale of the city’s stock exchange operator and the wider Hong Kong market.
“The Hong Kong market is doing very well, very active, the volume has increased quite a bit,” Chan told CNBC’s Emily Tan.
“So maybe it’s time for us to raise the stamp duty a little bit, which won’t affect our competitiveness and at the same time bring extra revenue to the government right now,” he added.
The finance secretary said the Hong Kong authorities have launched various initiatives in recent years to increase the competitiveness of the city’s stock market. This includes allowing dual-class stock listings and attracting US-listed Chinese companies to look for a secondary listing in Hong Kong, he said.
Hong Kong in 2020 has been one of the top markets for global listings, as Chinese companies such as e-commerce giant JD.com and gaming company NetEase have raised funds through secondary listings.
In total, the city’s stock exchange recorded 132 initial public offerings worth $ 32.1 billion and 199 additional offers worth $ 62.9 billion last year, according to data compiled by PwC Consulting.
With so much “robust” activity in the capital markets, raising the transaction stamp duty may provide Hong Kong with a “quick fix” to increase its short-term tax revenues, said Stanley Ho, a tax consultant. corporate consulting company KPMG China.
“However, it is also important for Hong Kong’s capital markets to remain competitive with global financial markets, many of which tend to reduce or eliminate such taxes,” Ho said in a statement after his budget speech. Chan.
Chan said he remains confident in Hong Kong’s prospects as an international financial center.
He explained that the government is working to promote Hong Kong as a center for sustainable and environmentally friendly financing, further developing the city’s fixed income markets and encouraging greater activity in the asset and wealth management sectors.
On the stock market sale after his announcement of a transaction tax increase, Chan said Hong Kong was not the only one to experience a “downward adjustment” following a previous period.
“So I would not mind the temporary fluctuations in the market. We believe that we are working hard to increase our market supply to increase the competitiveness and attractiveness of the Hong Kong market,” he said.
“We will continue to attract the flow of international capital.”