BEIJING, April 23 (Xinhua) -- The Chinese government on Wednesday announced it is to cut the share trading stamp tax from 0.3 percent to 0.1 percent from April 24 in an effort to boost the equities market, which has fallen 46 percent from its record high on Oct. 16.

    Experts expected the long-expected concrete support measure to give a strong boost to weak investor sentiment, following heavy sell-offs this year.

    The benchmark Shanghai Composite Index closed 4.15 percent higher at 3,278.33 on Wednesday, before the tax cut announcement. Despite the rise, it has dropped 37.7 percent this year after almost doubling last year.

    After approval from the State Council, or Cabinet, the Ministry of Finance (MOF) and State Administration of Taxation (SAT) decided to cut the transaction tax, said a government statement.

    The tax would be levied on both sides of the transaction, said the statement.

    The government raised the stamp tax to 0.3 percent from 0.1 percent on May 30 last year, in a bid to cool the stock market.

    Qiu Yanying, an analyst at TX Investment Consulting Co., said the move showed the government's desire to see a stable market and would help to restore investor confidence.

    "Confidence in recovery is more important than fund injections," said Qiu. "After earlier panic and irrational selling amid a breakdown in confidence, it is hard for the market to return to normal."

    "It was no longer a question of investment, but confidence," said Li Feng, an analyst at Galaxy Securities.

    Qiu said the move was timely, an if it had been delayed, it could have triggered heavy losses and become less effective.

    "Three thousand points is an important threshold for both regulator and investors and a sustained decline below the mark could be disastrous to investor confidence and trigger further selling."

    The key Shanghai index dropped below 3,000 points only briefly on Tuesday, before bargain hunting pushed it to close 0.99 percent higher at 3,147.79.

    "Further market declines can also have a huge negative impact on the economy," said Cao Fengqi, head of Peking University's finance and securities research center.

    Analysts said a prolonged fall would hurt consumer spending, an increasingly important driver behind the country's economy with exports growth slowing on signs of a U.S. recession.

    First-quarter losses by 346 mutual funds in China reached 647.5billion yuan (93 billion U.S. dollars), eight times the amount of the previous quarter, according to TX Investment Consulting.

    The latest move followed a couple of recent support measures. The China Securities Regulatory Commission (CSRC) on Sunday ordered block trading for bulk sale of shares freed from the lock-up period and said Monday it had punished two fund managers for insider trading.

    When more than 1 percent of a listed firm's total shares are sold within a month, the trade should be conducted through a separate block trading system operated by the Shanghai and Shenzhen exchanges, the CSRC said.

    Li added the market was expected to see a sustained rebound in the second quarter on low valuations, an ease in liquidity pressure, and no lower than 30 percent growth for first-quarter corporate profits.

Chinese shares rally on financial, metal stocks

    BEIJING, April 23 (Xinhua) -- Chinese shares surged 4.15 percent on Wednesday on a rally in financial, metal and mining stocks.

    The benchmark Shanghai Composite Index, which covers both A and B shares, closed up 4.15 percent, or 130.54 points to 3,278.33 on Wednesday. Full story

China's securities regulator unveils measure to stabilize market

    BEIJING, April 20 (Xinhua) -- China's securities regulator late Sunday ordered shareholders to sell stocks on the block trading system if they expect to sell a large amount of shares that were freed from the lock-up period.

    When more than ;1 percent of a listed firm's total shares are sold within a month, the holders should use the block trading system, the China Securities Regulatory Commission said. Full story 

Collapse of confidence sees stocks still falling

An investor looks over information at a stock exchange at a stock trading hall in Shanghai, April 18, 2008.(Xinhua Photo)
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    BEIJING, April 20 -- Shanghai stocks continued their downward trend for the third consecutive day yesterday, ending the week with the benchmark index closing below 3,100 points.

    The Shanghai Composite Index lost 128 points to 3,094.67. Turnover in the local market retreated to 56.18 billion yuan (US$8.02 billion), compared to 63.89 billion yuan on Thursday. Losers outnumbered gainers 771 to 51 while 83 remained unchanged.  Full story

China raises reserve requirement to curb liquidity, inflation

    BEIJING, April 16 (Xinhua) -- China's central bank on Wednesday ordered banks to set aside more money as reserve, the third such move this year, in the latest effort to curb excess liquidity and ease inflation.

    The reserve requirement ratio would be raised by 0.5 percentage points to a record high of 16 percent as of April 25, the People's Bank of China (PBOC) said in a statement on its website.Full story