Hong Kong Signaling Exchanges & Clearing Ltd. (HKEx) in Hong Kong
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Hong Kong’s plan to raise the stamp duty on securities trading will not hurt the competitiveness of the city’s financial markets, Finance Secretary Paul Chan told CNBC on Friday.
Chan said Wednesday in his budget speech that the government will raise the stamp duty paid on listed operations from 0.1% to 0.13%. The announcement sparked a stock sale by the city’s stock exchange operator and Hong Kong’s wider market.
“The Hong Kong market has gone very well, very active, the volume has increased quite a bit,” Chan told CNBC’s Emily Tan.
“Therefore, perhaps it is time for us to slightly increase the stamp duty that will not harm our competitiveness and at the same time bring additional revenue to the government at this juncture,” he added.
The finance secretary said Hong Kong authorities have in recent years launched various initiatives to improve the competitiveness of the city’s stock market. This includes enabling dual-class stock listings and attracting U.S. companies listed in the U.S. to seek a secondary listing in Hong Kong, he said.
Hong Kong in 2020 was one of the world’s leading listing markets, as Chinese companies such as e-commerce giant JD.com and gaming company NetEase raised funds through secondary listings.
In total, the city’s stock exchange recorded 132 initial public offerings worth $ 32.1 billion and another 199 bids worth $ 62.9 billion last year, according to data compiled by consulting firm PwC.
With such “strong” activity in the capital markets, raising the right to trade stamps can offer Hong Kong “a quick fix” to raising its short-term tax revenue, said Stanley Ho, a tax advisory partner. KPMG China consulting companies.
“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 these duties,” Ho said in a statement following Chan’s budget speech.
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 of sustainable and green financing, further developing the city’s fixed income markets and encouraging more activity in the asset and wealth management sectors.
Following the announcement of the trading tax hike, Chan said that on the stock market, Hong Kong was not the only one to experience a “downward adjustment” after a period previ.
“Therefore, I would not mind the temporary fluctuations of the market. What we believe is that we continue to work hard to improve our market supply to further improve the competitiveness and attractiveness of the Hong Kong market,” he said.
“We will continue to attract the inflow of international capital.”