Chinese Stocks Plummet After Trading Tax Tripled

Move aimed at containing market bubble; could trigger serous sell-off
By Sam Gale Rosen,  Newser Staff
Posted May 30, 2007 8:53 AM CDT
A stock investor reads a local newspaper with headline saying "Stamp tax for security trade has been adjusted to 0.3 percent from today" at a securities' company Wednesday May 30, 2007 in Shanghai, China....   (Associated Press)

(Newser) – Chinese stocks plummeted today, after the finance ministry tripled a tax on trades in an effort to deflate a worrisome stock market bubble. A week ago, the ministry publicly pledged not to raise the tax. The reversal opens the government to heavy criticism if it triggers a serious rout.

In China, millions have invested their savings in the surging market, which has quadrupled since the start of last year, the Times reports. Yesterday's 6.5% decline was the worst since a February plunge of 8.8% that unsettled investors around the world. The Journal said the move may not be enough to curb the runaway market; the Shanghai index is still 46% above the February plunge.  (Read more China stories.)