Tuesday, April 29, 2008

The Chinese government will NOT allow...

...its stock market to fall any further!

What was the fuel for the Shanghai rocket? The Chinese government sent a clear signal to investors, announcing two major policy changes last week designed to prop up the ailing market ...

Cheaper trading costs. The stock transaction tax, known as the stamp tax, was reduced from 0.3% to 0.1%. This move actually reverses a year earlier move when the Beijing bureaucrats raised the tax to cool what was then an overheated market.

Restrictions for big block sellers. A new 30-day lockup was announced for large institutional investors. Any transaction over 100,000 shares has to be conducted "off" the market in a private institutional transaction. What this effectively does is reduce the amount of new shares hitting the market.

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