China Market rebounds 0.6%

The Mainland China share market finished session higher on Thursday, December 30, 2021, as investors sentiment was lifted by government pledges to focus on a consumption recovery and reduce certain income tax rates as part of efforts to stimulate economic growth.

At close of trade, the benchmark Shanghai Composite Index advanced 0.62%, or 22.19 points, to 3,619.19. The Shenzhen Composite Index, which tracks stocks on China's second exchange, added 0.91%, or 22.76 points, to 2,517.16. The blue-chip CSI300 index rose 0.78%, or 38.03 points, to 4,921.51.

China's government said it would extend some favourable income tax policies to ease the burden for middle- and low-income groups, as the government seeks to encourage household spending as part of efforts to stimulate economic growth. Preferential taxes on year-end bonuses will stay in place till the end of 2023, lower taxation on equity incentives will continue through 2022 and exemptions on some tax payments will be given to low income earners, according to a State Council statement released Wednesday. The measures will reduce annual personal income tax by 110 billion yuan ($17.3 billion), the statement said.

 

The announcement of the extended tax relief measures comes in the lead-up to the Lunar New Year, China's busiest shopping season. As Chinese policy makers look to reverse a slowdown caused by a worsening property slump, weak consumption and the coronavirus, the tax steps could boost decelerating retail sales growth.

CURRENCY NEWS: China's yuan was down against the U.S. dollar on Thursday despite firmer mid-point fixing by the central bank. Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate CNY=PBOC at 6.3674 per dollar, 61 pips firmer than the previous fix of 6.3735. In the spot market, the onshore yuan CNY=CFXS was changing hands at 6.3689 around late afternoon, 0.01% lower than the previous late session close of 6.369.

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