Chart of the Day: China Reaps Record Gain From Tax on Stock Trades

China’s revenue from duties levied on stock trading grew at the fastest pace in five years in the first two months of 2021, hitting a record as investors flocked to the market on upbeat expectations for the nation’s post-epidemic recovery.

Stamp duty earnings on stock transactions were 66.5 billion yuan ($10.2 billion) in the January-to-February period, an increase of 90.5% year-on-year, the biggest amount for the two-month period on record, and quickest growth for the period since 2015, according to data (link in Chinese) released Thursday by the Ministry of Finance. China imposes the duties at a rate of 0.1% (link in Chinese) of the transaction value.

The upbeat figures were buoyed as the number of new stock investors surged by 162% year-on-year, or 2.1 million, in January and again in February by 80%, or 1.6 million, to 181.5 million, according to data from China Securities Depository and Clearing Corp. Ltd., a state-owned institution that provides securities registration and settlement services.

Investors are pouring into China’s two main bourses on upbeat expectations for a strong recovery of the nation’s economy after easing of the domestic Covid-19 epidemic. The blue-chip CSI 300 Index, which consists of the 300 largest and most liquid A-share stocks on the Shanghai and Shenzhen stock exchanges, hit a 13-year high last month as continued fund inflows into the A-share markets from Hong Kong were bolstered via the Stock Connect program.

During the first two months, total trading volume in the Shanghai and Shenzhen stock exchanges reached 35.2 trillion yuan, up 17% year-on-year, according to official data compiled by economic data provider CEIC.

Contact reporter Luo Meihan (meihanluo@caixin.com) and editor Lin Jinbing (jinbinglin@caixin.com)

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