Stamp duty hits liquidity

Investment management company Chartwell Capital said the high cost of stamp duty in the Hong Kong stock exchange is a major reason for the market's low liquidity.

Samantha Wong

Wednesday, September 19, 2018

Investment management company Chartwell Capital said the high cost of stamp duty in the Hong Kong stock exchange is a major reason for the market's low liquidity.

Currently, the trading cost in Hong Kong stands at 0.22 percent, the highest among other international finance centers, said Chartwell founder and chief investment officer Ronald Chan Wai-yan.

The SAR is followed by London, which has a trading cost of 0.2 percent. Chan said Hong Kong and London have the lowest liquidity ratio among major financial markets at 43 percent and 44 percent respectively. In contrast, the United States and Japan have relatively higher market liquidity ratios at 116 and 93 percent as their trading fees are lower.

Chan cited Australia as an example where its trade volume in the stock market rose 50 percent after cutting its stamp duty from 0.3 percent to 0.15 percent.