Friday, September 19, 2008

China stock prices rise to daily limit following stamp tax cut

China stock prices rose to the daily limit in the morning session after opening 9.06 percent higher on Friday, after the government moved to scrap the stamp tax on stock purchase a day earlier in a move to boost the equities market.

The benchmark Shanghai Composite Index reached 2,075.08 points, up 9.45 percent or 179.24 points from the previous close around 10:30 in the morning, and stopped to rise further.

All the stocks rose to the daily limit, except those which suspended trading on Friday. The special treatment stocks, companies of which suffer losses for two consecutive years, are allowed to rise no more than 5 percent.

The government said late Thursday it would cancel the 0.1-percent stamp tax on purchasing shares while that on share selling remained unchanged at 0.1 percent.

The move came after domestic stocks fell for three consecutive days under the influence of U.S. financial market upheaval.

Also on Thursday, the government's investment arm -- Central Huijin Investment Co., Ltd. -- said it would buy shares of three major Chinese lenders on the secondary market to fortify their share prices.

The three lenders, the Industrial and Commercial Bank of China, the Bank of China and the China Construction Bank, had shed heavy losses in the previous three days of trading, as banks were most hit by the spreading crisis on the Wall Street.

The market surge also came after the Wall Street rallied on news of a possible government rescue plan to create an entity like the Resolution Trust Corp. to absorb banks' bad loans.

Boosted by the overnight Wall Street advance, regional markets in Asia mostly opened higher on Friday.


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