Hong Kong share trading volume likely to grow after stamp duty cut: analysts

HONG KONG (AFX-ASIA) - Stockmarket trading volume is likely to increase following the government's proposal to cut stamp duty on share transactions to to 0.20 pct from 0.225 pct per round transaction, analysts said. "It's in line with international norms that stamp duty should be kept at a minimum level or even zero. The Hong Kong stockmarket is likely to see trading volume increase given the proposal of a stamp duty cut," Sunny Chan, vice president of research at KGI Securities, said. He said he expects the proposal to prompt further buying interest from fund managers and institutional investors in the local bourse given the lower transaction costs. "Fund managers and institutional investors are expected to welcome the move more than retail investors as the latter are less concerned about stamp duty than price movement," Chan said. Yvonne Law, deputy tax managing partner in charge of corporate and asset protection services at Deloitte Touche Tohmatsu, said she expects the proposal to provide a psychological boost encouraging professional investors to make investments in Hong Kong. She said the majority of other major world markets have already scrapped stamp duty on stock trading. Although the government expects a budget deficit for the upcoming years, Law said the decrease in revenue due to the cut in stamp duty would not be significant.

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