Hong Kong Passes Bill to Raise Stamp Duty on Stock Trades

HKEX required all the market participants to prepare for stemp duty raise to be effective on August 1.

Hong Kong's Legislative Council on Tuesday (2 June) passed a bill that will increase the stamp duty payable by buyers and sellers on stock trades.

The raising of the stamp duty on stock from 0.1% to 0.13% was first announced in February, as part of efforts to raise government revenue. It is expected to raise government revenue by HK$ 19.267 billion based on the trading volume in 2020 in Hong Kong.

At the time, the decision was criticised, based on estimates that it would raise trading costs by 6-15%, depress trading volumes and squeeze HKEX's earnings per share by 3-7%.

Increased transaction costs may discourage investors and make the financial hub the second most expensive capital market behind London.

In a circular, HKEX asked market participants to take all necessary actions to prepare for the stamp duty increase, including to enhance their Broker Supplied Systems, back office systems, relevant applications and operational facilities.

In February 2021, HKEX​ announced it was investing 210 million RMB for 7% stake in Guangzhou Futures Exchange.