MercoPress. South Atlantic News Agency

Boosted by savers China's stock markets continue to soar

The Chinese government trebled the stamp duty on the trading of shares in what analysts say is a bid to cool the country's overheated stock market. The tax will rise from 0.1% to 0.3% with immediate effect, Beijing said.

Chinese state media reported a government official as saying that the tax rise - which has been approved by the Chinese cabinet "is intended to help promote the healthy development of the securities markets". Chinese shares have continued rising at a breakneck pace, and on Monday pushed Shanghai's benchmark index through the 4,000 mark for the first time. The CSI 300 index has doubled in value this year and quadrupled since the start of 2006. Strong demand from domestic investors, many of whom are using savings to buy shares, is helping to underpin gains. One of the main factors behind the surge in shares has been a willingness among ordinary people, such as students and pensioners, as well as investors and businesspeople, to buy shares. Instead of leaving their savings in bank accounts, many people are now using the cash to buy shares in the hope of receiving better returns. According to industry figures, 300,000 people a day opened brokerage accounts in China last week. However, some analysts have warned that a stock market bubble is being created and last week, former Federal Reserve chairman Alan Greenspan warned that the Chinese stock market could undergo a dramatic correction. In January 2005, Beijing cut the tax rate from 0.2% to 0.1% as it tried to boost trading in stocks.