China tripled the tax on securities trading to cool demand for equities, sending China Life Insurance Co. and other U.S.-traded mainland shares lower.
The government raised the stamp tax to 0.3 percent from 0.1 percent, effective May 30, the official Xinhua News Agency reported, citing the Ministry of Finance. China Life, the nation's biggest insurer, slid $1.33 to $46.51 and PetroChina Co., the top energy company, fell 80 cents to $128.15 in U.S. trading.
The higher tax is aimed at promoting a ``healthy'' stock market, Xinhua said. The CSI 300 Index surged threefold in the past year, prompting central bank officials, former U.S. Federal Reserve Chairman Alan Greenspan and Li Ka-shing, Asia's richest man, to warn of the market's imminent collapse. The CSI 300, which tracks yuan-denominated A shares, today rallied to all-time high, its 11th record this month.
``It's a great way to massage the market down,'' said Don Elefson, who manages $1.2 billion in emerging market stocks at U.S. Trust Co. of New York. For the Chinese government, ``this is merely a way of saying, `Fine, if you want to invest in a market at crazy levels, go crazy. But we're going to make it more expensive for you.'''
The Bank of New York China ADR index slid to its low of the day following the Xinhua report. It finished with a 1 percent drop. The Morgan Stanley Capital International Emerging Market Index erased its gains, losing 0.3 percent.
China Telecom Corp., the country's biggest fixed-line phone operator, slipped 59 cents to $52.76. Brilliance China Automotive Holdings Ltd., an automaker, fell 72 cents to $23.48.
Opening Brokerage Accounts
China's brokerage accounts topped 100 million for the first time as investors yesterday opened a record 455,111 accounts to trade mainland shares and mutual funds, according to the China Securities Depository & Clearing Corp.
More than 20 million accounts have been opened at brokerages so far this year, four times the amount in all of 2006, according to the clearing house.