China Halts Fund Sales Following Stock Transaction Tax Cut

Despite Stimulus Intentions, Capital Outflow Persists

Chinese authorities have imposed restrictions on fund sales following a reduction in stock transaction taxes to stimulate the stock market.

Bloomberg News, citing sources, reported that on the 28th, the China Securities Exchange issued guidelines restricting asset sales to several large mutual fund companies through "window regulation." The China Securities Regulatory Commission and the Shanghai Stock Exchange did not respond to Bloomberg's inquiries regarding the facts.

This measure came a day after Chinese authorities announced a reduction in stock transaction stamp duty for the first time in 15 years to boost the stock market. Previously, the authorities announced on the 27th that the 0.1% stock transaction stamp duty would be cut by 50% starting from the 28th.

On the same day, the Securities Regulatory Commission also announced the introduction of measures such as easing the pace of initial public offerings (IPOs), additional regulations on major shareholders reducing their stakes, and lowering margin requirements. The Securities Regulatory Commission had previously announced stock market support measures for long-term investment, including reducing stock trading costs and supporting share buybacks, on the 18th.

Recently, foreign investment has been withdrawing from the Chinese securities market amid concerns over an economic downturn. According to statistics from the State Administration of Foreign Exchange of China, the amount of direct investment debt in the second quarter of this year was $4.9 billion (approximately 6.48 trillion KRW), a sharp 87% decrease compared to the same period last year. The direct investment debt amount represents the scale of new foreign direct investment (FDI).

Following the announcement, the Shanghai Composite Index initially surged more than 3% at the start of trading on the 28th, the day after the related measures were announced, but closed with a 1.13% increase. Global investors net sold mainland stocks worth 8.2 billion yuan (approximately 1.49 trillion KRW) through transactions linked to Hong Kong on the same day.

This content was produced with the assistance of AI translation services.