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Friday, November 14, 2014

More on Stock Connect in China

via Bloomberg

China will waive capital-gains taxes for foreign stock investors using the Shanghai-Hong Kong (HSCEI) bourse link, clarifying its rules three days before the program’s debut provides unprecedented access to mainland shares.
Institutions already investing in Chinese markets through the so-called QFII and RQFII programs will also get a “temporary” tax waiver starting Nov. 17, the Ministry of Finance said in a statement today, without giving a time frame for the exemption. Chinese individuals who buy Hong Kong equities through the link get a three-year exemption, while mainland companies using the connect will be charged tax.
International money managers have been seeking to resolve confusion over the tax policy before the bourse link gives them a new route to access China’s $4.2 trillion stock market. MSCI Inc., which kept mainland shares out of its global indexes in June, said the lack of clarity was one of investors’ biggest concerns.

“It’s positive news for the market and foreign investors,” Zhang Gang, a strategist at Central China Securities Co. in Shanghai, said by phone. “The stock connect can start in a stable manner on Monday.”

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