Shanghai, Shenzhen Exchanges to Cut A-Share Trading Fees

Shanghai, Shenzhen Exchanges to Cut A-Share Trading Fees by 25%
The benchmark Shanghai Composite Index is up 9 percent in 2012, after slumping 33 percent in the previous two years. Photographer: Qilai Shen/Bloomberg

China’s two stock exchanges will lower fees charged for trading yuan-denominated shares by 25 percent with effect from June 1, the nation’s securities regulator said in a statement on its website yesterday.

The Shanghai and Shenzhen bourses will charge both buyers and sellers 0.087 percent of the transaction value, and the Shanghai branch of the China Securities Depository & Clearing Corp. will set transfer fees at 0.375 percent of transaction value, according to the China Securities Regulatory Commission.

China’s capital market has expanded over the years as the number of listed companies and stock trading volumes increase, paving the way for lower fees, the CSRC said. The changes will ease the burden on investors and spur the “healthy development” of the market, it said.

“The regulators are trying to revive and excite the trading in the A-share market, which has been a poor market over the last few years,” Khiem Do, the Hong Kong-based head of Asian multi-asset strategy at Baring Asset Management Asia Ltd., which overseas about $10 billion, said by telephone. “The spirit of the change is obviously to get retail investors to go back into the A-share market and increase trading activity.”

The benchmark Shanghai Composite Index is up 9 percent in 2012, after slumping 33 percent in the previous two years.

About 8.95 billion A shares changed hands each day this year on the Shanghai stock exchange, and average daily trading in Shenzhen was 3.5 billion shares. That’s a fraction of the 153 billion shares traded on the Hong Kong stock exchange each day, according to data compiled by Bloomberg.

Research is also being conducted to lower the cost of information disclosure and other operating fees, according to the CSRC’s statement.

— With assistance by Baizhen Chua, and Weiyi Lim

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