Chinese stockmarkets soar sharply on lowering stamp tax

Chinese stock markets, in the doldrums for a long time, closed sharply higher Monday in the wakeof the country's new policy of lowering the stamp tax imposed on securities transaction.

The benchmark Shanghai Composite Index, which covers both A- and B-shares, closed up 1.73 percent at 1,255.78 points on turnover of over 9.0 billion yuan (1.08 billion US dollars), whilethe Component Stock Index at Shenzhen Stock Exchange closed up 55.6 points at 3,111.4 on Monday.

The Ministry of Finance announced Sunday it will lower the stamp tax from 0.2 to 0.1 percent beginning Monday in an effort topromote the growth of the securities markets.

The decision is good news for the country's bearish stock markets, which slumped to record lows in nearly six years during the past week. Shareholders said they would thoroughly lose their confidence if the market continued to go down.

Chinese stockmarkets have been bearish, and investment sentiment has been quite weak for the past several years, owing toirregularities by listed firms, securities firms and structural problems of the stock market system.

It's hard to say how long the rebound can be sustained. Howeverexperts said improved securities tax system, lowering investment cost and rising profits are most helpful to stimulating investors'positivity

China imposed a 0.6 percent stamp tax on stock transactions when its stock markets were created since 1990. The tax rate was later readjusted a couple of times.

China has collected more than 116 billion yuan (around 13.9 billion US dollars) in stamp taxes on stock transactions over the past seven years.