Shares of the operator of the Hong Kong Stock Exchange tumbled 11%, the biggest one day fall since 2008, after the city’s government announced it would increase the stamp duty on stock trading in the global financial hub.
The stamp duty paid on listed stock trades by both buyers and sellers will be increased to 0.13% from the current 0.1%.
Hong Kong Financial Secretary Paul Chan announced the increase in his budget speech, saying the decision had been made after duly considering the impact on the securities market and international competitiveness.
“The government will continue to spare no efforts in introducing measures to facilitate the development of the securities market, so as to take our financial services sector to the next level,” Chan said.
HKEX shares slumped 11% when the market reopened after the lunch break, the biggest one day fall since October 2008.
Hong Kong’s Securities and Futures Commission and HKEX did not immediately respond to requests for comment. But market players in Hong Kong said a stamp duty hike would not come as a surprise following heavy government spending to tackle the COVID-19 pandemic.
“The stock market has been so good last year, and also this mild…increase in the stamp duty, I don’t think it will bring a too-big negative impact on the trading of stocks in Hong Kong,” said Steven Leung, executive director, institutional sales at UOB Kay Hian.
The Hong Kong government previously estimated it would earn HK$35 billion ($4.51 billion) in stamp duty revenue for the current fiscal year as a result of high trading volumes.
HKEX announced a 23% rise in net profit for 2020 on Wednesday, just above estimates.