HK shares plunge 3% as investors decry tax hike

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  • 2021-02-24 HKT 17:02″ title=”The Hang Seng Index plunged 3 percent to below the 30,000 mark as investors booed a controversial decision to raise Hong Kong’s stamp duty on equity trades. Image: Shutterstock”>


    The Hang Seng Index plunged 3 percent to below the 30,000 mark as investors booed a controversial decision to raise Hong Kong's stamp duty on equity trades. Image: Shutterstock
    The Hang Seng Index plunged 3 percent to below the 30,000 mark as investors booed a controversial decision to raise Hong Kong’s stamp duty on equity trades. Image: Shutterstock

Hong Kong shares plunged almost three percent on Wednesday as investors reacted to a controversial proposal to increase stamp duty on equity trades.

The Hang Seng Index started the day slightly higher but started falling right before financial secretary Paul Chan presented his budget – in which he said stamp duty on stock trades would rise from 0.1 to 0.13 of the transaction value.

The bourse plummeted by more than 1,100 points at one stage before recovering to end the day 914 down at 29,718 on a record turnover of HK$353 billion.

The stock exchange operator, Hong Kong Exchanges and Clearing, was the day’s biggest loser, plummeting 8.8 percent despite announcing record earnings for last year.

Meituan and Cnooc each lost about seven percent.

But Sino Biopharm bucked the trend and put on 2.5 percent to become the winner of the day.

Utilities CLP Holdings, Hong Kong and China Gas Company and Power Assets outperformed as well and gained between 0.8 and 2.3 percent.

Markets across the border also headed south, with selling accelerating towards the end of the day amid concerns over high valuations and policy tightening.

The Shanghai Composite Index tumbled two percent in its biggest daily percentage loss in seven months.

The blue-chip CSI300 index shed 2.6 percent and the Shenzhen Composite retreated two percent.

Other regional markets were also under pressure as high US treasury yields hampered appetite and investors continued to worry about high stock valuations.

The Nikkei in Japan fell 1.6 percent. Seoul’s Kospi suffered a 2.5 percent drop. Taiwan gave up 1.4 percent. Australi fell 0.9 percent. But Singapore put on 1.3 percent.