China Stocks Drop as Stamp Duty Triples: World's Biggest Mover
By Zhang Shidong and Darren Boey May 30 (Bloomberg) -- China's stocks tumbled the most in three months after the government tripled the tax on securities transactions to cool a rally that's drawing more than 300,000 new investors a day. The CSI 300 Index dropped 281.83, or 6.8 percent, to close at 3886.46 in Shanghai, the biggest fluctuation among markets included in global benchmarks. The value of local stocks has more than doubled this year to $2.47 trillion and brokerage accounts topped 100 million for the first time this week. ``The Chinese government is concerned that there's too many people in the market, and they're gambling,'' Mark Mobius, who oversees some $30 billion as managing director of Templeton Asset Management Ltd., said in an interview in Hong Kong. ``It's good for people to not expect that markets go up continuously.'' More than half of the shares included in the CSI 300 fell by the 10 percent daily limit today, including Citic Securities Co., the nation's largest publicly traded brokerage, and China Shipping Development Co., the biggest oil tanker operator. The value of shares traded in China today was a record 407.1 billion yuan ($53 billion), according to data compiled by Bloomberg. That's more than changed hands in either of the New York Stock Exchange's past two trading sessions. Stamp duty on share trades was increased to 0.3 percent ``to promote the healthy development of the securities market,'' the finance ministry said on its Web site. The central bank this month raised interest rates for the second time this year, encouraging people to save rather than invest in stocks, and brokerages were ordered to make investors sign a declaration acknowledging risks when opening accounts. `Skittish' Markets The government has been trying to curb speculation for months. A crackdown on investments with borrowed money on Feb. 27 led to a 9.2 percent drop in the CSI 300, the biggest decline since it was introduced in April 2005. The Shanghai Composite tumbled the most in a decade and the rout sparked a global sell- off that wiped out about $3.3 trillion of stock market value. Today's losses contributed to declines in regional markets, with Japan's Nikkei 225 Stock Average losing 0.5 percent and Hong Kong's Hang Seng Index falling 0.9 percent. European and U.S. stocks also retreated. The Dow Jones Stoxx 600 Index of European shares lost 0.8 percent to 391.19 as of 9:41 a.m. in New York, while the Standard & Poor's 500 Index dropped 0.4 percent to 1512.82 . ``Today's correction in Chinese shares is causing a knee- jerk reaction across Asia,'' said Shane Oliver, who helps oversee $83 billion at AMP Capital Investors in Sydney. ``Markets have become skittish on this type of news given some of the extreme reactions in recent history.'' `Healthy' Mobius said a 30 percent decline in China's stock valuations would be ``healthy.'' A steeper drop may trigger unrest, said Fraser Howie, co-author of the book ``Privatizing China: The Stock Markets and Their Role in Corporate Reform.'' ``If the market falls 50 percent, a lot of retail investors will lose money, vested interests will lose money,'' Howie said. ``That leads to demonstrations and people in the streets.'' Li Shi, a 50-year-old retired factory worker, predicts the market will be in the doldrums for the next couple of months. He bought shares of property developer Beijing Centergate Technologies (Holding) Co. in April, resulting in a paper profit of 10,000 yuan ($1,308) before today's fall. The stock plunged by the 10 percent daily limit on the Shenzhen exchange today. ``I don't dare to sell because I'll have to incur a real loss if I do,'' Li said today in an interview at Tiantong Securities Co.'s Chaoyangmen branch in central Beijing. ``I've invested my entire life savings in the stock market.'' Students Warned About 10 percent of maids in Shanghai resigned because they made more money trading shares, the government-run Eastday Web site reported April 24, citing a local employment agency. The Ministry of Education this week warned students not to get involved in stock trading because they may be unable to bear their losses if the investments turn sour. Today's increase in stamp duty is ``something real to curb speculation and prevent the market from overheating,'' said Li Xuewen, who manages about $284 million at Invesco Great Wall Fund Management Co. in Shenzhen. ``If the market doesn't cool down, more measures to stem the gains will probably follow.'' Some 22 million accounts have been opened at brokerages so far this year, four times the amount in all of 2006, according to the China Securities Depository & Clearing Corp. Investors on May 28 opened 455,111 accounts, a daily record. Earnings Improve They're piling in as earnings improve after four straight years of economic growth exceeding 10 percent. The World Bank today raised its 2007 growth forecast to 10.4 percent, from 9.6 percent, and Moody's Investors Service said the nation's debt rating is under review for possible upgrade. Surging investment has made Chinese shares the most expensive in the Asia-Pacific region, with the CSI 300 Index valued at 44 times reported earnings, according to data compiled by Bloomberg. That's almost double valuations in Japan and India, the region's next most costly markets. Central bank officials, former U.S. Federal Reserve Chairman Alan Greenspan and Li Ka-shing, Asia's richest man, have all warned of a looming correction since the start of May. The CSI 300, which tracks yuan-denominated A shares, yesterday rallied to a new high, its 11th record this month. China started to levy stamp duty in 1990, and initially set the rate at 0.6percent. This is the eighth time the government has adjusted the rate. The last time the government raised the tax was on May 10, 1997, when it was lifted to 0.5 percent from 0.3 percent. The Shanghai Composite Index rose 2.3 percent on the first day of trading after the announcement, before tumbling about 30 percent over the next 4 ½ months. ``The stamp tax is the latest gesture by the Chinese government to warn investors,'' said Phil Chen, who manages $154 million at Grand Cathay Securities Investment Trust Co. in Taipei. ``The trouble is, Chinese investors probably won't care if a few breadcrumbs are dropped in the transaction as they have such extraordinary returns on their investments.'' On 5/30/07, Widhie !!! <[EMAIL PROTECTED]> wrote:
Saham-saham pertambangan sedang tertekan (TINS, INCO, ANTM). Sinyal-sinyal teknikal sudah beberapa hari ini menunjukkan oversold, tapi ya itu, klo fundamental sedang bermasalah, sinyal teknikal tidak bakal ada artinya. Penutupan hari ini sinyal Doji Star di TINS sangat menarik (cek WD Watch List edisi terakhir dan Chart TINS). Mungkin inikah saatnya sinyal teknikal memberi indikasi awal rebound ? Kita liat besok... Rgds
