Stamp duty will go up? Hong Kong stocks high diving

Hong Kong stocks encountered a wide range in early trading today, and plunged in early trading. The Hang Seng Index rose more than 1% from the intraday to fall by more than 1%.

On the news, the media reported that Hong Kong’s Financial Secretary Chen Maobo said today that he would not rule out further increases in stock stamp duty.

Stamp duty will go up? Hong Kong stocks high diving

Earlier on February 24, Hong Kong announced a 30% increase in stamp duty. The Hong Kong stock market fell sharply on that day, and the Hang Seng Technology Index plummeted by more than 5% that day.

Hong Kong stocks encountered intraday diving again in early trading! Hong Kong further increase stock stamp duty?

The Hang Seng Index rose for a while in early trading, but plunged rapidly during the session.

Among the constituent stocks of the Hang Seng Index, Chinese stocks led the declines, with CNOOC, PetroChina, Sinopec Chemical Co., Ltd., China Unicom and other stocks leading the decline.

The Hang Seng Technology Index performed relatively better, the index once rose more than 3% in early trading today. Stocks such as QQ Music and Meituan rose sharply during the intraday session. However, as the Hong Kong stock market plunged, the gains of these two stocks subsequently narrowed sharply.

According to news from many media this morning, Hong Kong Financial Secretary Chen Maobo said today that the possibility of a further increase in stamp duty cannot be ruled out. The increase in stamp duty will not affect the competitiveness of the Hong Kong stock market. After the above news was fermented, the Hong Kong stock market saw another significant dive.

Prior to this, on February 24, 2021, Hong Kong suddenly announced a 30% increase in stamp duty.

On February 24, the Financial Secretary of the Hong Kong Special Administrative Region Government, Chen Maobo, announced in his budget that the Hong Kong government plans to increase stock stamp duty to 0.13% in order to increase revenue. Previously, buyers and sellers were paid 0.1% of the transaction amount.

The Budget mentions that it is not suitable to adjust the profits tax and salaries tax rates, nor does it have the conditions to introduce new taxes. The SAR government will continue to review, make timely adjustments, make research and preparations for new taxes, and conduct discussions at appropriate times to seek consensus.

Affected by the above news, the Hong Kong stock market’s Hang Seng Index fell sharply by more than 900 points, or 2.99%, and the Hang Seng Technology Index, which is concentrated in Hong Kong stock technology stocks, dropped by 5.1%. As one of the index stocks to measure the coolness and heat of Hong Kong stocks, the stock price of the Hong Kong Stock Exchange crashed that day, and it still fell 8.78% at the close. Since 2021, the “high fever” in the Hong Kong stock market has suddenly cooled down.

Southbound funds recently sold more than 20 billion Hong Kong dollars and bought more than 2 billion Hong Kong dollars in the morning

It is worth noting that after the recent adjustments in the Hong Kong stock market, the Southbound Southbound Trading Fund also began to show net selling.

The data shows that on February 24, Hong Kong Stock Connect sold a net HK$19.960 billion, which was the highest in history. On the next day, Southbound Trading resumed net purchases, with net purchases of HK$1.7 billion. However, on February 26, Southbound Stock Connect again sold a substantial net HK$7.595 billion. In general, in just a few days, the total net sales of Southbound trading funds exceeded 20 billion Hong Kong dollars.

This morning, Southbound Trading showed net buying again. As of press time, net buying exceeded 2 billion Hong Kong dollars.

Multiple factors affect the direction of the Hong Kong market. How does the organization look at it?

There are many factors affecting the Hong Kong stock market recently. In addition to the news of stamp duty adjustments, there are other factors that are also affecting Hong Kong stocks.

CICC believes that the performance of the Hong Kong stock market last week was not unremarkable. Not only did the major stock indexes have their biggest weekly decline since the outbreak, but also the single-day net outflow of southbound funds reached a new high since the opening. However, the agency believes that the violent market turbulence is mainly caused by external factors or one-off events, rather than from the fundamentals of the market itself. For example, the Hong Kong government unexpectedly announced on Wednesday that it might plan to increase stamp duty on stock transactions, triggering panic selling and outflows of large amounts of funds. However, the agency estimates that the actual impact of the increase in stamp duty is relatively limited. On the other hand, the US long-term Treasury bond yields have soared, triggering resonance in global stock markets, and it is difficult for the Hong Kong stock market to stand alone in this context.

CICC believes that it has to admit that Hong Kong, as a global financial center, is more sensitive to international market sentiment and liquidity, so external disturbances will inevitably affect its short-term performance. However, CICC believes that the basic factors that determine its long-term trend have not been affected, such as continuous improvement in growth prospects and a positive liquidity environment (resonant inflow of overseas funds and southbound funds).

CICC believes that in the medium-term dimension, the stock market has recently experienced sell-offs and violent turbulence, but instead provides a better medium-term buying point, especially high-quality targets with higher valuations. Looking ahead, in addition to external dynamics such as changes in U.S. bond yields, the upcoming two sessions and the 2020 performance period are also worthy of attention.

Regarding the adjustment of the constituent stocks of the Hang Seng Index, Yuekai Securities believes that from the Hang Seng Index Company’s adjustment of the Hang Seng Index constituent stocks and index weights, it can be seen that the new economy stocks and China concept stocks represented by medical health and large consumption have gained Pay more attention. At the policy level, the Hong Kong Stock Exchange will continue to deepen the reform of the listing system in October 2020, expand the scope of application of “same shares with different rights”, attract high-quality blue-chip white horse stocks to relist in Hong Kong, and enhance Hong Kong’s market competitiveness. The index adjustment also sent a positive signal to investors to strengthen the emphasis on new economic stocks and China concept stocks, and attract funds to the Hong Kong stock market.