"Filling the COVID-19 Fiscal Deficit" Hong Kong Raises 'Stock Transaction Stamp Duty Rate' for the First Time in 28 Years

Previous 0.10% → 0.13% Increase
Stock Market Strengthens Amid Low Economic Growth
"Significant Portion of Expenditure Expected to Be Offset"

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[Asia Economy Reporter Hyunju Lee] Hong Kong, suffering from a record fiscal deficit due to the economic recession and increased fiscal spending caused by the COVID-19 pandemic, has decided to raise the stamp duty rate on stock transactions for the first time in 28 years.

According to Bloomberg on the 24th (local time), the Hong Kong government announced that it will increase the stamp duty rate on stock transactions from the previous 0.10% to 0.13%, a 0.03 percentage point rise, for the first time since 1993.

This measure is intended to cover the necessary fiscal expenditures to support the people of Hong Kong affected by COVID-19. The Hong Kong government had previously announced plans for additional fiscal spending exceeding HKD 12 billion. The increase in the stamp duty rate is expected to offset a significant portion of these expenditures. The stamp duty revenue collected last year totaled HKD 33.2 billion.

The reason behind the Hong Kong government's decision to raise the stamp duty rate is that despite the extremely poor economic growth rate last year, the stock market showed strength and trading volume surged. The Hong Kong Stock Exchange, the operator of the exchange, recorded a net profit of HKD 11.5 billion last year, a 23% increase compared to the previous year. The stock trading value increased by 60%, marking the highest annual net profit ever.

Following the announcement of the increase in the stock transaction stamp duty rate, the Hang Seng Index closed at 29,692.62, down 3.07% from the previous trading day.

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