To Cut Stock Transaction Clearing Fee By Half To Boost Equities

• China announced earlier that it will cut the A-share stock transaction fee to 0.01% (of total amount) in Shanghai and Shenzhen stock exchanges (from 0.02%) to boost equities, which have remained vulnerable despite rate cuts and rising ‘liquidity’.
  • The cut will be effective on April 29.
• The sharp deceleration in the Chinese economic activity in the past year due to the strict ‘zero-Covid’ policy has been weighing on domestic asset prices, particularly equities.
• Hang Seng Index is down 35% from its high reached in February 2021 (which corresponds to the peak in the Chinese economy), and risky assets have not been able to bounce back despite China officials’ efforts (easing policy, measures to crack down on ‘malicious short sellers’, rising TSF…).
  • HSI found support slightly below the 20,000 level on Wednesday; a break below that level would have opened the door for a move down to 18,235.50 (March 15 low).
• On the topside, resistance to watch stands at 21.287.60, which corresponds to the 23.6% Fibo retracement of the 18,235.50 - 31,168.30 range.

Source: Bloomberg/MNI