Stock tax reform 'may buoy market'

Measure to encourage long-term investment and reduce speculation

Chinese stock investors and analysts are pinning their hopes on the further reform of the securities sector to end a long-running bear market which has cut trading volumes and weakened investor confidence.

Experts said they were encouraged by the introduction of new dividend tax rates, which they hope may help the market regain some stability.

But one former chairman of the China Securities Regulatory Commission told China Daily that the continued falling market was "irrational" given the "still rapidly growing economy".

Zhou Zhengqing, who served as chairman of the commission for three years to 2000, said: "Effective measures, in terms of economic, administrative and legal policies should be taken to stabilize the stock market."

At Friday's close, the benchmark Shanghai Composite Index retreated 0.8 percent to 2,014.73, hitting its lowest close since Sept 26.

The index has dropped 9 percent since the start of the year, after shedding 22 percent in 2011. It fell 2.6 percent this week — the biggest fall among Asian markets — adding to a 2.3 percent fall last week.

In a move aimed squarely at encouraging individual investors to take a long-term approach to their stock market planning, the Ministry of Finance had earlier announced it will apply a sliding scale to taxes on stock dividends for individuals from Jan 1, 2013.

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