The Hong Kong government has announced that stamp duty on trading of all exchange-traded funds (ETFs) will be waived.
This extends a waiver from 2010 that scrapped stamp duty on ETFs that track indexes comprising not more than 40% of Hong Kong stocks. The change has been welcomed by market operator Hong Kong Exchanges and Clearing.
There were 116 ETFs listed in Hong Kong at the end of last year, representing an increase of 68% compared with three years ago. The daily average turnover of ETFs increased from HK$2.4 billion to HK$3.7 billion during that time.
According to the government the waiver extension will save the industry HK$200 million of stamp duty per annum.
Stamp duty still applies to other stock transactions, at a rate of 0.1% for both buyer and seller. This levy has served as a deterrent to high-frequency traders operating in Hong Kong, and this is reflected in the relationship of shares traded per month compared to total market capitalisation, which is approximately 50% in Hong Kong, but three times higher in Japan.