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<Research>JPM: If CN Waives Div. Tax for Stock Connects, Big 4 CN Banks Like CCB Expected to Benefit Most
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The China Securities Regulatory Commission (CSRC) and the State Administration of Taxation (SAT) are reviewing a plan submitted by Hong Kong to exempt the 20% profits tax on dividends from Hong Kong stocks bought through Southbound Trading of Stock Connects, Bloomberg News quoted sources as saying. If the plan is adopted, JPMorgan believed that it would be a major positive to HKEX (00388.HK)'s trading volume, JPMorgan issued a research report saying. As the gap between the after-tax rate of H-/ A-shares will widen, it will be favorable to banks. JPMorgan predicted that CCB (00939.HK) will benefit the most as CCB's A-share dividend return was 5.7%, but CCB's H-share dividend return was 8.3%, meaning that the difference between its H-/ A-share dividends is 2.6%, higher than the dividend spread between H-/ A-shares of ABC (01288.HK), BANK OF CHINA (03988.HK) and ICBC (01398.HK) of 1.8%/ 1.8%/ 1.9%, respectively. In terms of brokers, JPMorgan believed that CICC (03908.HK), HTSC (06886.HK) and CITIC SEC (06030.HK), which account for a higher share in Hong Kong stock trading volume, will deliver better performance in the near term if the dividend tax on Southbound Trading of Stock Connects is waived. AAStocks Financial News |
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