China stocks slip in volatile trade despite fresh steps to calm investors
SHANGHAI, Sept 8 (Reuters) - China major stock indexes fell in volatile in early trading on Tuesday, after Beijing introduced fresh measures - including tax cuts and a proposed "circuit breaker" system - to discourage speculation and stem further slides in share prices.
The CSI300 index fell 0.7 percent to 3,226.53 points at 1:59 GMT, while the Shanghai Composite Index lost 0.7 percent to 3,060.16 points - both indexes were shunted in and out of the black in a reflection of the fragile sentiment.
Late on Monday, China said it would remove personal income tax on dividends for shareholders who hold stocks for more than a year, in a move aimed at encouraging longer-term investment in equities as opposed to short-term speculation.
The announcement came hours after regulators proposed introducing a "circuit breaker" on China's flagship CSI300 index to help stabilise the market.
The Shanghai Stock Exchange also restricted trading in stock options, which can be used by stock investors as a tool to place bearish bets on the market.
But some analysts said these measures would do little to reverse the downtrend of the market.
"The circuit breaker may help calm sentiment, but it doesn't change investors' attitude toward stocks," said Hou Yin, analyst at AJ Securities.
He added that the tax cuts offer little incentive to stock buyers because "investors prefer to stand on the sidelines due to huge uncertainty they face."
In addition, some analysts and traders say government restrictions on shorting activities could be counterproductive, as investors who aren't able to adequately hedge risks in futures or options market have no choice but to unwind their positions in the cash market to reduce risks.
China CSI300 stock index futures for September were flat at 3,120, 106.53 points below the current value of the underlying index.
The Hang Seng index in Hong Kong was up 0.4 percent, to 20,661.26 points. (Samuel Shen and Pete Sweeney; Editing by Shri Navaratnam)
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