Alibaba, JD.com, and Other Chinese Stocks Climb. What Is Behing the Rally.

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China’s Ministry of Finance on Sunday said it would halve stamp duty on securities transactions, to 0.05%, starting Monday.

Chinese stocks climbed on Monday after the government said it would reduce a tax on trading and take other steps to boost its capital markets.The measure is designed to “invigorate the capital market and boost investor confidence,” according to the Chinese government-backed Global Times newspaper. China’s securities regulator also plans to limit new listings, which could help balance supply and demand, and relax margin rules for buying securities.

Hong Kong’s Hang Seng Index rose 1.0%. Big technology companies were among the gainers, with Alibaba rising 1.7% and JD.com gaining 1.0%. in local trading. Read this American depositary receipts of Alibaba were up 0.9% in premarket trading and ADRs of JD.com were up 1.5%. The move is the latest in a series of efforts to lift confidence among Chinese investors in the face of the country’s sputtering economy and ongoing tensions between the U.S. and China.

Recent proposals from the China Securities Regulatory Commission ranged from offering longer trading hours to encouraging share buybacks by listed companies. However, such reforms might not be enough to build long-term confidence from overseas and domestic investors as they watch for the potential fallout from the company’s ailing property sector, which represents 70% of Chinese households’ wealth.

 

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